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Asian equities rose on Monday, taking heart from upbeat earnings and US economic data that eased recent global growth fears and sharpened the risk appetite.
The euro ticked higher but financial markets largely showed a muted reaction to Sunday’s health check results of euro zone banks, which painted a slightly brighter picture than expected.
Euro zone health checks
Of the euro zone’s 130 top lenders, 25 failed the health checks at the end of last year but most have since repaired their finances, the European Central Bank had said on Sunday.
Still, the test results were a sombre reminder that much work still remained, with the euro zone bank sector’s long-term attractiveness damaged by revelations of extra non-performing loans and hidden losses that will dent future profits.
“Banks face a significant challenge as the sector remains chronically unprofitable and must address their €879-billion exposure to non-performing loans as this will tie-up significant amount of capital,’’ accountancy firm KPMG noted.
The euro was up 0.1 per cent at $1.2699, edging away from a two-week low of $1.2614 hit last week in the wake of concerns about the bank tests.
Asian equities advanced, with the MSCI’s broadest index of Asia-Pacific shares outside Japan climbing 0.1 per cent and Tokyo’s Nikkei gaining 0.5 per cent.
“Stable housing starts in the US and solid Q3 GDP in the UK are likely to give the market some comfort after the recent concerns about global growth,’’ strategists at Barclays wrote in a note to clients.
US home sales, UK economy
Data on Friday showed new US home sales rose to a six-year high, while Britain’s economy expanded 0.7 per cent in the third quarter, still on track to outpace other advanced economies.
US stocks, recovering from a battering earlier in the month on worries about global growth losing momentum, gained on Friday on upbeat earnings from blue chips Microsoft and Procter & Gamble. Easing worries over the possible spread of Ebola in the United States also helped.
The dollar traded at 108.08 yen after touching a three-week peak of 108.38, with a rise in US Treasury yields and improving risk appetite shoring up the greenback.
The Brazilian real’s non-deliverable forwards showed muted response so far after leftist President Dilma Rousseff narrowly won re-election on Sunday.
Investors have generally disliked Rousseff's interventionist management of state-run companies and other sectors of the economy, but some traders think her re-election is already priced in as the real has fallen nearly 10 percent since early September.
Brent crude, spot gold
In commodities, Brent crude fell 32 cents to $85.81 a barrel, continuing a months-long rout as signs of rising global supply threatened deeper losses.
Iraq increased its oil supply in October and Libya’s output remains high, despite instability in both countries.
Gold edged lower as robust equity markets and strong US economic data dented demand for the precious metal.
Spot gold was down 0.1 per cent at $1,230.97 an ounce.
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