Asian shares gain as Wall Street hits record, Catalan fears ease

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SYDNEY (Reuters) – Asian shares rose on Wednesday, tracking Wall Street’s rally to all-time highs, while the euro hovered near a 10-day peak after Catalonia’s leader talked down immediate plans to secede from Spain, easing near-term concerns about euro zone instability.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged 0.24 percent higher to test a recent decade peak of 545.56.

Australian stocks jumped 0.6 percent to one-month highs and New Zealand’s index .NZ50 climbed to a record. South Korea’s KOSPI .KS11 added 0.3 percent to a 2-1/2 month peak.

Sentiment was boosted after the International Monetary Fund upgraded its global economic growth forecast for 2017 and 2018, driven by a pickup in trade, investment, and consumer confidence.

The three major Wall Street indices scaled record highs again, with Dow .DJI up 0.3 percent, the S&P 500 .SPX adding 0.2 percent and the Nasdaq .IXIC inching 0.1 percent higher.

Japan’s Nikkei .N225 was a touch softer at 20,807.39.

In currency markets, the euro EUR= held gains around $1.1816, not far from Tuesday’s high of $1.1825, after Catalonian President Carles Puigdemont called for talks with Madrid to discuss the region’s future.

The gesture tempered fears of immediate unrest in a major euro zone economy and cheered investors. Madrid’s IBEX 35 Index futures MFXIc1 added 1.1 percent, after the cash IBEX stock index .IBEX closed down 0.9 percent on Tuesday.

“Markets were on edge, and no doubt so was he,” said David Plank, head of Australian economics at ANZ Banking Group, referring to Puigdemont’s address at Catalonia’s parliament.

“But the declaration for independence did not come, at least not explicitly,” Plank said. “This issue remains extremely fluid. But one thing is clear – this is not going to go away quickly or quietly.”

The dollar continued to lose ground with U.S. President Donald Trump’s escalating war of words with Senator Bob Corker raising concerns about the administration’s ability to pass promised reforms.

The dollar index .DXY fell to 93.22, against a basket of currencies, to the lowest level since Sept.29.

The greenback was also under pressure amid ongoing uncertainty over the next Federal Reserve Chairman, with the predictions market site, PredictIt, favoring Fed governor Jerome Powell as the most likely candidate.

While Powell is more hawkish than incumbent Janet Yellen whose term expires in February, he might be less aggressive in winding back stimulus compared to rival contestant Kevin Warsh, analysts said.

Investors will keep an eye on the minutes of the Fed’s September meeting due later in the day, which might help bolster views of a December rate hike.

U.S. Treasuries pared gains on news out of Spain as a risk-on mood kicked in. Treasury futures TYc1 were down 4 ticks in early Asian trade.

In commodities, U.S. crude CLcv1 was last off 2 cents at $50.90 per barrel and Brent LCOcv1 eased 8 cents to $56.53 after rising on Tuesday following export cuts by Saudi Arabia.

Gold prices hovered near their highest in two weeks against the backdrop of a weaker dollar, with spot gold XAU= up 0.18 percent at $1,289.61 an ounce.

Reporting by Swati Pandey; Editing by Sam Holmes



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