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Asian shares rise, emerging market fears ease

Asian markets rose on Wednesday following Wall Street's lead, as tensions over emerging markets eased and ahead of a Federal Reserve decision on its stimulus programme.

HONG KONG: Asian markets rose on Wednesday following Wall Street's lead, as tensions over emerging markets eased and ahead of a Federal Reserve decision on its stimulus programme.

Tokyo stocks jumped 2.70 per cent, or 403.75 points, to 15,383.91 as the dollar climbed and confidence rose after the central banks of India and Turkey increased interest rates, countering a sell-off in their currencies.

Seoul rose 1.26 per cent, or 24.22 points, to 1,941.15 and Sydney finished 1.04 per cent, or 53.9 points, higher at 5,229.0.

Hong Kong added 0.82 per cent, or 180.97 points, to end at 22,141.61 and Shanghai rose 0.56 per cent, or 11.40 points, to 2,049.91.

In other markets, Manila added 0.78 per cent, or 47.03 points, to 6,069.84, Kuala Lumpur gained 0.45 per cent, or 7.98 points, to close at 1,789.23, while Mumbai fell 0.18 per cent, or 36.21 points, to 20,647.30 points.

Bangkok slipped 0.03 per cent, or 0.37 points, to 1,271.42, Jakarta ended up 1.74 per cent, or 75.70 points, at 4,417.35, and Singapore closed down 0.47 per cent, or 14.48 points, at 3,047.93.

Taipei was closed for a public holiday.

With the stability of emerging economies back on the agenda, dealers are waiting to find out what the Fed plans to do with its huge stimulus programme.

Last month, the Fed said it would reduce the bond-buying by US$10 billion a month to US$75 billion from January, citing an improved US economy.

While it has been credited with fuelling an investment boom in developing countries, there are fears that the removal of the cheap cash will lead to huge capital outflows.

Those fears were brought into focus last week when Argentina's peso slumped 14 per cent against the dollar, leading to a sell-off in the currencies of other emerging nations such as Indonesia, India and Thailand. That in turn sent global markets tumbling.

However, tensions eased somewhat on Tuesday after India and then Turkey -- whose currencies have come under pressure -- raised their borrowing rates.

The Reserve Bank of India lifted its benchmark repo rate, at which it lends to commercial banks, by 25 basis points to 8.0 per cent. Hours later, Turkey hiked its overnight lending rate to 12 per cent from 7.75 per cent.

The dollar eased to 2.1794 lira, down from 2.2520 lira before the announcement, and well off its 2.39 lira peak on Monday. The rupee was at 62.23 to the greenback on Wednesday, against levels around 63.20 previously.

A more upbeat outlook helped the dollar rise against the yen, which is considered a safer bet in times of uncertainty.

In afternoon Tokyo trade, the dollar fetched 103.23 yen against 102.97 yen in New York on Tuesday.

The euro inched up to 141.05 yen from 140.73 yen while also sitting at US$1.3665 against US$1.3667.

Daisuke Uno, strategist at Sumitomo Mitsui Banking Corp, told Dow Jones Newswires: "With Turkey and India raising interest rates and the US Fed set to make its decision on policy soon, markets are still cautious."

He said there was a 70 per cent chance the Fed would cut its stimulus but added that it may wait until the next meeting. "The central bank is walking a very narrow tightrope, and dares not further upset emerging markets."

A rise in New York on Tuesday helped Asian markets. The Dow rose 0.57 per cent, ending a five-day losing streak, the S&P 500 increased 0.61 per cent and the Nasdaq added 0.35 per cent.

Data showed US consumers gained confidence in the economy for the second straight month in January, with rising expectations for overall growth and earnings gains.

The Conference Board said its Consumer Confidence Index rose to 80.7, up from 77.5 in December and far better than the 58.4 in January 2013.

Oil prices were mixed. New York's main contract, West Texas Intermediate for March delivery, eased 28 cents to US$97.13. Brent North Sea crude for March was up one cent at US$107.42.

Gold fetched US$1,251.50 at 0810 GMT, compared with US$1,254.37 late Tuesday.

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