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Asia Offers Muted Applause For ECB

Friday, June 06 08:24:52

Asian markets turned mixed on Friday as investors offered only polite applause for the European Central Bank's latest stimulus package, while the euro became an unlikely star following a sharp short-covering rally.

Trading was hesitant as attention quickly shifted to the U.S. payrolls report due later on Friday where the outcome is considered even more uncertain than usual.

While the median forecast is for a solid jobs gain of 218,000, estimates range from a little as 110,000 to as high as 325,000.

The ECB action provided enough of a boost to risk sentiment to generate a 0.3 percent lift in MSCI's broadest index of Asia-Pacific shares outside Japan.

"From a broader perspective, the ECB's latest easing measures are important," said Frederic Neumann, co-head of Asian economics research at HSBC.

"They underline our call that global liquidity should remain highly accommodative for emerging markets and Asia in particular for the foreseeable future."

Japan's Nikkei went flat after again shying away from testing April's peak at 15,164. Speculation that more government pension funds will flow into the market helped sentiment somewhat.

Financial spreadbetters expected Britain's FTSE 100 to open up 0.3 percent, Germany's DAX to gain as much as 0.4 percent and France's also 0.4 percent.

Wall Street had notched up new records with the Dow up 0.59 percent and the S&P 500 0.65 percent, while the Nasdaq managed a 1.05 percent gain.

The gains came after the ECB cut interest rates to record lows and launched a series of measures to pump money into the sluggish euro zone economy.

Still, ECB President Mario Draghi implied this would be the low point for rates and the bank stopped well short of quantitative easing (QE).

Draghi did emphasise that more action would be taken if needed, but markets are only too well aware that it usually takes ages for the central bank to actually move. The last time the ECB announced such a big package was in August 2012 - a gap of almost two years. (Reuters)