Asian stocks hit a record high yesterday and the dollar plumbed an all-time low versus the euro and a basket of major currencies as investors bet the US Federal Reserve would cut interest rates this week.
Lifted by upbeat earnings from firms such as Nissan Motor, Japan's Nikkei average climbed 1.6 percent to a one-week high, while MSCI's measure of other Asia Pacific stocks advanced 1.9 percent.
The MSCI index hit an all-time high of 585.32, surpassing the previous peak of 574.04 set on Friday and has gained more than 45 percent this year -- triple the gains for MSCI's main world equity index
"A [US] rate cut is already factored in and this is helping to boost the Nikkei," said Masayoshi Okamoto, head of dealing at Jujiya Securities.
Lower US interest rates should boost economic growth in Asia's main export market, and also make equity valuations more attractive.
Hong Kong share prices closed sharply higher, up 3.9 percent, as strong liquidity and hopes of lower interest rates pushed the market through the 31,000-point mark, dealers said.
Property stocks led the gains, while China banks were in the limelight on earnings leads, they said.
The Hang Seng Index closed up 1,181.68 points at 31,586.90, off a low of 30,986.22 and a new all-time high of 31,604.50.
There was heavy turnover at HK$177.63 billion (US$22.92 billion).
Among other major markets in the region, South Korea's KOSPI also reached a new life high, while Australia's S&P/ASX 200 index was a whisker away from its record high set on Oct. 15.
After two straight weeks of losses, Chinese stocks rebounded, pushing the Shanghai Composite Index more than 2 percent higher.
Markets were led by financial names as investors expected that further rate cuts by the Fed, whose two-day policy-setting meeting opens today, will help loosen up credit markets that had been kicked hard by the US subprime market woes. Persistent weakness in the US housing market is expected to spur the Fed to lower rates again.
Japan's top lender, Mitsubishi UFJ, jumped 5.5 percent and South Korea's Kookmin Bank gained 4 percent.
Investors also snapped up Nissan Motor, sending the stock up 13 percent, after the automaker posted a surprise gain of 12 percent in quarterly operating profit on Friday, while Australian nickel miner Jubilee Mines climbed 40 percent on the back of a US$2.8 billion takeover offer from Anglo-Swiss miner Xtrata.
Amid expectations of lower US rates, the dollar plumbed new depths against the euro. The dollar index, which measures the greenback's value against a basket of six major currencies, eased 0.2 percent, after earlier touching an all-time low of 76.890.
The euro rose to a high near US$1.4415 and also climbed against the Japanese currency to ?164.50. The dollar bought ?114.14 little changed from late New York levels on Friday.
US data this week, including the advanced reading of third-quarter economic growth report, will help determine the fate of the dollar.
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