* Euro may head to $1.32 in near term after Portugal bond
sales
* Financial stocks shine; HSBC stock outperforms a second
day
* Inflation haunts as oil, grain prices climb
By Kevin Plumberg
HONG KONG, Jan 13 (Reuters) - The euro was stable on
Thursday and could head higher if Spain and Italy like
Portugal also find decent demand for their debt, while U.S.
oil prices marched above $92 a barrel, potentially straining
consumers watching food prices climb.
Promises from China and Japan to support Europe through
its fiscal crisis have also helped to keep the euro above
$1.31 and the closeout of small bets against the euro could
push it up above $1.32 in the near term, particularly as
global equity markets hit two-year highs.
The euro zone's financing troubles have generally been a
drag on investors' risk taking, though with signs that highly
indebted European countries are able to tap capital markets
albeit at high borrowing costs, risk seeking may be back in
play.
Japan's Nikkei share average rose 0.7 percent to
an 8-month high, with stocks of large exporters among the
biggest boosts to the index.
"The strong bond auction in Portugal has calmed the
markets and with no major negative factors in sight, foreign
funds continue buying lagging banking and property shares,"
said Mitsushige Akino, chief fund manager at Ichiyoshi
Investment
Management, in Tokyo.
Japanese bank stocks outperformed a second day as foreign
investors kept loading up on previously underweighted
financials. Shares of Mitsubishi UFJ Financial Group ,
Japan's biggest bank by assets, gained 1.3 percent.
HSBC Holdings will be a focus on Thursday after
its London-listed shares climbed 3.8 percent overnight. The
Hong Kong-listed shares of the company were heavily traded on
Wednesday as investors bet the bank would catch up with the
share price gains of rival Standard Chartered Plc .
The MSCI index of Asia Pacific shares outside Japan was up
0.8 percent , within striking distance of a
2-1/2-year high that has been tested twice in the past two
months.
EURO BOUNCE TEMPORARY?
The euro was holding at $1.3120 , up around 2
percent so far on the week. Traders may take a shot at the low
from Jan. 3 at $1.3248 in the next few sessions, though that
may depend on how well Spain's 3 billion euro two-year bond
auction and Italy's combined 7 billion euro debt auctions go.
"We can't help feeling that the bounce in sentiment will
prove temporary and whilst it may continue over the short-term
with attendant upside risks for the euro, it is unlikely to
last for long unless concrete measures are unveiled by the
authorities in Europe," Mitul Kotecha, global head of foreign
exchange strategy with Credit Agricole CIB in Hong Kong, said
in a note.
For now, Portugal's successful fund raising in the bond
market, and at a lower cost for its 10-year debt issue, along
with encouraging euro zone industrial production data, helped
put a spring in the step of the common currency.
U.S. crude oil prices rose above $92 after crude stocks in
the world's largest oil user fell more than expected and a
cold weather stoked demand for heating oil in the U.S.
Northeast.
Food inflation remained a global concern. There appeared
to be no let up in climbing costs of edibles. U.S. corn
futures <Cc1> jumped 1.5 percent on Thursday, while soybeans
<Sc2> rose nearly 1 percent to their highest in almost 2-1/2
years, buoyed by a surprisingly deep cut in the U.S.
Agriculture Department's forecast for U.S. corn and soybean
stocks.
(Additional reporting by Antoni Slodkowski in TOKYO; Editing
by Sanjeev Miglani)
