(Adds European outlook, fresh prices)
By Lincoln Feast
SINGAPORE, Feb 21 (Reuters) - Asian stocks rebounded on
Thursday as solid earnings and expectations of further U.S.
interest rate cuts outweighed inflation worries, even as oil
hit a record high above $101 a barrel.
European shares were also set for a rally on a busy day for
corporate results, with financial bookmakers in London
expecting gains of 1-1.4 percent for major markets in London
<>, Frankfurt <> and Paris <> .
While stocks recouped losses from the previous session,
commodities held centre stage as investors bet they will
outperform as growth slows and prices rise.
Gold <XAU=> hit a record above $945 an ounce and silver hit
a 27-year peak.
Data on Wednesday showed a faster-than-expected rise in
U.S. consumer prices last month and further weakness in the
housing market there. []
"Certainly, oil prices at over $100 a barrel are stirring
jitters, but market players still seem to believe the Federal
Reserve is more concerned about the slowing economy and is
likely to keep slashing interest rates," said Samuel So,
analyst at Samsung Securities in South Korea.
The weak housing market and problems in the credit market
prompted the Fed to cut its 2008 U.S. economic growth forecasts
on Wednesday, with analysts interpreting comments as paving the
way for further reductions in borrowing costs. []
Japan's benchmark Nikkei <> closed up 2.8 percent,
recouping most of Wednesday's losses, while MSCI's index of
other Asian stocks <.MIAPJ0000PUS> rose 1.5 percent by 0625
GMT.
Since tumbling more than 10 percent in January, Asia stocks
have endured choppy, volatile trade and investors are wary of
calling an end to that.
"It's like a Japanese saying about a winter season around
this time; three cold days and four warm days," said Katsuhiko
Kodama, senior strategist at Toyo Securities.
Taiwan stocks <> rose 2.4 percent, Hong Kong <>
added 1.4 percent and Seoul <.KSS> ended up 1 percent.
Shanghai <>, which fell on worries about a big share
sale by Pudong Bank <600000.SS>, pared losses after sources at
the lender said it might cut the size of its planned issue by
up to a quarter. []
Australian stocks <> added 1.6 percent, helped by
solid earnings from phone company Telstra <TLS.AX>, pallet
maker Brambles <BXB.AX> and national carrier Qantas <QAN.AX>.
CREDIT CONCERNS
While equities have been running hot and cold, commodity
markets have been on fire. The Reuters-Jefferies CRB Index
<.CRB>, which tracks prices for 19 commodity futures, hit a
record high for the fourth day running.
"There's been a movement of investment funds from other
asset classes to commodities again, and I think gold has
benefited from that move," said Darren Heathcote of Investec
Australia.
Gold's rise lifted silver <XAG=> to $17.90 an ounce, its
highest since December 1980, and Malaysian palm oil futures
<KPOK8> also hit a record high.
Crude oil <CLc1> hit a peak of $101.32 on Wednesday, near
its all-time inflation adjusted high of $101.70 hit in April
1980, according to the International Energy Agency.
It steadied around $99.93 in Asia trade.
But despite strong commodity prices, it was Asian
technology companies that led stock indexes up after a strong
profit outlook from computer and printer maker Hewlett-Packard
Co <HPQ.N>.
"HP's forecast-beating profits indicated tech product
demand in the U.S. market has not been hit by the subprime
crisis as hard as investors had worried," said James Wang,
chief investment officer of Capital Securities Investment Trust
in Taiwan.
However, credit markets highlighted the ongoing risks from
the crisis, which has hammered earnings of financial companies,
dried up funding for deals and dragged down U.S. house prices.
Indexes of U.S and European corporate bonds widened to
record levels above safe-haven government paper on Wednesday,
further limiting the availability of credit.
BONDS FALL
Government bond prices were also under pressure with
Japanese government bond futures <2JGBv1> falling to a six week
low as the rise in equity markets and better-than expected
Japanese trade data weighed. []
In currency markets, the dollar gave up gains made in the
wake of the strong inflation data after the Fed's weaker
assessment of the economy.
The dollar was buying 108.20 yen <JPY=>, while the euro was
at $1.4725 <EUR=>.
Worries about the weak U.S. outlook pushed the dollar to a
more than two-year low versus the yen last month.
(Editing by Kim Coghill)
