By Rafael Nam
HONG KONG, May 19 (Reuters) - Asian shares hit a new
four-month high on Monday as a relentless rise in oil prices
bolstered resource shares, but wariness about inflation and
doubts about the U.S. economy kept gains in check.
The dollar was range-bound after its drop on Friday when
data showing a plunge in U.S. consumer confidence to a 28-year
low raised doubts about when the U.S. Federal Reserve will
raise interest rates in the world's largest economy.
Asian shares have rebounded 20 percent since hitting the
year's low in mid-March, but record oil prices continue to
worry, despite the benefit to resource firms, given the
prospects of inflation at a time of slowing global economic
growth.
"In the short run, you might say it's good for resources,
but what I'd suggest is that the very high prices are, in fact,
steadily and very meaningfully eroding demand," said Angus
Gluskie, portfolio manager at White Funds Management in Sydney.
"Ultimately, that's not going to provide a pretty picture."
The MSCI broad measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.5 percent by 0203 GMT, after earlier
hitting its highest level since mid-January. However, that is
still down about 5 percent down for the year.
The index breached the key psychological 500-point level on
Friday, extending a recovery since mid-March on hopes the worst
of the credit crisis has passed and that earnings in Asia will
prove more resilient than expected.
Gains in Asian stocks on Monday were driven in large part
by resource firms such as Sydney-listed Woodside Petroleum Ltd
<WPL.AX>, though the overall advances were moderate.
Australian shares rose 0.7 percent. Tokyo's Nikkei average
<> and shares in Taiwan <> and Hong Kong <> rose
less than 0.5 percent each.
But shares in South Korea <> fell 0.3 percent, while
Shanghai <> lost 1.1 percent.
OIL PRICES
Concerns over tight fuel supplies led oil prices higher,
with U.S. light crude for June delivery <CLc1> up 33 cents at
$126.62 a barrel, near the record $127.82 hit on Friday.
Oil prices have risen six-fold since 2002 and doubled since
last year as strong demand from China and other developing
nations comes amid tightening production capacity.
"The (oil) market still has a bullish leaning because of a
weak dollar and fuel supply concerns," said Sydney-based David
Moore, a commodity analyst at the Commonwealth Bank of
Australia.
Gold also rose, with spot prices <XAU=> up at more than
$903 an ounce against $899.55 late in New York on Friday, when
prices of bullion jumped above $900 to its highest level in
three weeks, tracking higher oil prices and a weaker dollar.
The dollar inched up 0.1 percent to 104.20 yen <JPY=>,
though the weakening trend seen this year remains intact.
The U.S. currency dropped on Friday on data showing the
Reuters/University of Michigan index of consumer confidence
dropped to 59.5 in May, the lowest since June 1980.
[]
Concerns abound about how central banks around the world
will deal with rising inflation at a time of slowing global
economic growth.
The Bank of Japan is expected to keep interest rates
unchanged at 0.5 percent at its two-day meeting that ends on
Tuesday, with its hands tied by lingering uncertainty over the
global economy and worries about rising energy costs.
[]
Japanese government bond futures climbed, pulling away from
a seven-month low hit last week, as dealers covered short
positions. The market remains volatile amid concerns about
global interest rates and the pullback of hedge funds and other
players.
June 10-year futures <2JGBv1> rose 0.57 point to 135.28 by
mid-morning.
