Asian stocks hit their highest level in 13 months today and the Australian dollar surged after US economic data raised hopes that the global economic recovery was strengthening.
Shares in Japan rose 1.2 per cent as a Reuters Tankan survey showed the mood among Japanese manufacturers this month was at its highest level in a year on expectations conditions would improve in the next three months.
Hopes that the pace of global economic recovery was accelerating kept the US dollar close to the one-year low it hit against a basket of currencies on Wednesday, as investors continued to buy riskier assets and higher-yielding currencies, including the Australian dollar, which hit a fresh one-year high.
South Korean authorities were spotted intervening for a second day after the won hit an 11-month high at 1,204.9. Strong sales reports from the country's top three department stores helped push the benchmark KOSPI index up 0.9 percent although there was a note of caution from the Finance Ministry, which said the economy faced high uncertainty.
Gold and oil prices steadied as the dollar stopped sliding. Gold was trading at around $1,016 after hitting an 18-month high yesterday but shares of gold miners were still in demand and Australia's Newcrest Mining rose 1.6 per cent.
"Commodities are looking good again," said Martin Angel, a dealer at Patersons Securities.
"A lot of people are suggesting (gold) is a hedge against inflation, so a lot of people are looking around for gold stocks."
Oil steadied above $72 a barrel and was underpinned by data showing a much sharper-than-expected drop in U.S. crude oil stockpiles last week.
Share and commodity markets were buoyed by US data which showed industrial output in the world's biggest economy rose for a second month in August and inflation was tame. That pushed the Dow Jones industrial average up 1.1 per cent yesterday.
In Asia, the MSCI index of Asia Pacific stocks traded outside Japan was up 1.3 per cent by mid-morning on Thursday, its highest level since August last year.
Winning stocks included exporters such as Japanese car maker Toyota Motor and electronics giant Sony, as well as South Korea's Hynix Semiconductor, the world's number two memory chip maker.
Toyota and Sony were up 1.4 and 2.6 per cent respectively while Hynix rose 1.7 per cent.
Shares of Australian resources shares were also boosted by optimism that global growth could be faster than forecast.
Top miners BHP Billiton and Rio Tinto jumped 1.8 per cent and 2.6 per cent respectively while Australia's biggest independent oil and gas group, Woodside Petroleum, surged 3.1 per cent.
Expected rising demand for commodities helped push the Aussie dollar past $0.8751 to a fresh one-year high while the Kiwi skirted 13-month highs at $0.7157 reached in offshore trade.
China shares were 1.3 per cent higher while Japanese government bonds retreated as Tokyo stocks gained ground - further evidence that increasingly confident investors are moving away from safe havens into riskier assets.
Reuters