By JACQUELINE WONG
SINGAPORE, June 9 (Reuters) — Asian shares rebounded on Friday as investors bought beaten-down stocks such as South Korea’s Kookmin Bank and oil prices retreated, while expectations of higher US interest rates kept the dollar firm.
Oil prices have fallen to around $ 70 a barrel after news that al-Qaeda’s leader in Iraq, Abu Musab al-Zarqawi, had been killed in a US air raid, raising hopes for improved security and oil exports from Iraq.
Cheaper oil supported equities, but further gains were seen capped by concerns about rising global interest rates and worries about US inflation.
Gold fell to its lowest price since mid-April as a big sell-off overnight accelerated on Friday in reaction to a stronger US dollar. Spot gold was quoted as low as $ 607.10 an ounce. Gold stood at $ 608/$ 609 compared with $ 609.50/610.20 late on Thursday in New York.
European markets followed the firm Asian tone. London’s FTSE 100, Germany’s DAX and France’s CAC all traded more than 1 percent higher in early trading.
In Tokyo, the Nikkei ended up 0.8 percent at 14,750.84 while the broader TOPIX index rose 1.1 percent to 1,498.68. The MSCI’s index of non-Japan Asian shares was up nearly 1 percent by 0610 GMT.
Analysts said the Tokyo market was seen nearing a floor after this week’s sharp sell-off.
"The great speed of the slide this week suggests a market being oversold and about to come back," said Hiroshi Arano, an adviser at Dai-Ichi Kangyo Asset Management.
"But I’m concerned about how badly hurt individual investors are during the sell-off... Their revival would be a key catalyst for the market’s strong turnround," he said.
Stronger-than-expected Japanese machinery orders in April underscored a healthy economic recovery and encouraged investors to buy machinery stocks such as Komatsu Ltd.
Global markets have been buffeted in recent weeks by worries of growing inflationary pressures in the United States and Asian markets have been further hit by fears that foreign investors would pull money out of higher-risk emerging-market assets.
Hong Kong’s Hang Seng was up slightly. Cathay Pacific Airways rose about 8.5 percent, the top bluechip gainer, after the carrier said it would take over Dragonair in a $ 1-billion deal that expands its access to China.
Shares in Taiwan rebounded 1.78 percent from six-month lows led by heavyweight tech firms such as TSMC, while South Korea’s main index climbed 1 percent.
Australia’s S&P ASX 200 rose 1.2 percent in a bounce-bank from its biggest one-day percentage slide since 2001 on Thursday, and Singapore’s Straits Times Index was up 1.4 percent.
The dollar hovered near a one-month high against the euro, a day after rallying on indications the European Central Bank would be modest in raising interest rates following its latest rise.
The ECB raised interest rates a quarter-percentage point to a three-year high of 2.75 percent on Thursday, disappointing some expectations for a rise of 50 basis points.
But the ECB’s latest rate hike underlined fears that global interest rates were on the rise. India and South Korea were among countries that also raised rates on Thursday.
Gains against the euro boosted the dollar versus the yen, pushing the US currency to a six-week high.
The dollar faces a big hurdle later on Friday with data on the US trade gap in April due at 1230 GMT, which may revive worries that a weaker dollar is needed to correct a gaping deficit.
The US currency slipped 0.2 percent to 113.95 yen as some investors locked in profits from the dollar’s rise to 114.74 yen in the previous session, its highest since late April.
Benchmark NYMEX crude dropped 35 cents at $ 70 a barrel by 0640 GMT, having lost 47 cents on Thursday, when it touched a low of $ 69.10 a barrel during intra-day trade.
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