(Updates prices, adds European outlook)
By Tom Miles
HONG KONG, Feb 19 (Reuters) - Investors put January's
global market slump behind them on Tuesday and, daring to trust
that the U.S. economy would not spring any more ugly surprises,
ventured into banking stocks and U.S.-focused exporters.
But fear of a U.S. economic slowdown, which has dogged
markets for months, could hammer stocks again if symptoms
persist and financial bookmakers expect markets in London
<>, Paris <> and Frankfurt <> 0.2 to 0.5
percent lower.
With U.S. markets on holiday on Monday, there was none of
the bad news that has stung global markets repeatedly since
October, allowing traders to breathe easy and hope that
January's trough would prove to be rock bottom.
"It's not that a sick person is cured, it's just that the
sick person has recovered somewhat from the initial shock of
being diagnosed with an illness," said Harushige Kobayashi,
head of the research department at Maruwa Securities.
MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> was up 1.9 percent by 0644 GMT, but still 18
percent below its November peak.
Japan's Nikkei average <> closed up 0.9 percent, but
remains 21 percent below its October high.
Commodity and oil prices stayed high with crude oil <CLc1>
bubbling up to $96.30 in Asian trade as worried about
Venezuela's row with Exxon Mobil <XOM.N> outweighed concern
about demand sagging. []
Copper for delivery in three months on the London Metal
Exchange <MCU3> touched a four-month peak of $8,065.
Asian demand for raw materials has caused prices to rocket
despite the worsening outlook for the U.S. economy. Platinum
<XPT=>, a precious metal also used in car exhaust systems,
powered to a record high for the 14th day in a row.
RELIEF
But high materials costs seemed to be factored into stocks,
with Monday's 65 percent price hike in iron ore negotiations
causing few ripples and even some relief among Asian
steelmakers.
The strong metals prices helped lift Australian stocks
<> 1.1 percent, despite the strength of the Australian
dollar <AUD=>, which hit a three-month high against the U.S.
currency as central bank minutes pointed to another interest
rate rise next month. []
Australia's rise was bolstered by rebounding banks. The
financial sector, which has borne the brunt of bad news over
the last year, also found some favour elsewhere in Asia as
investors began to hope European banks' results this week would
show improvement in writing down subprime mortgage losses.
South Korean banks helped the Korea Composite Stock Price
Index <> to hit a one-month high, while Hong Kong's Hang
Seng index <> was led up by Bank of China <3988.HK>, which
said it had set aside enough provisions to cover subprime
exposure and would report "marked" profit growth.
"People are thinking the write-off for subprime will be
less than expected," said Y.K. Chan, strategist at Phillip
Securities.
"People are buying shares gradually, even though we had a
sell-off yesterday.
But there could be more bad times just around the corner as
investors are awaiting a slew of economic indicators, including
U.S. January housing starts due on Wednesday.
China's yuan <CNY=> rose for the fourth straight session
and set a new high against the dollar as inflation set a fresh
11-year record and raised expectations that Beijing would let
the currency rise later this year. []
(Additional reporting by Kim So-young in SEOUL; Chikako Mogi
and Rika Otsuka in TOKYO, Rita Chang in Hong Kong; Editing by
Lincoln Feast)
