Asian shares up, Scottish vote seen lifting Europe

By Reuters

Sep 19, 2014 03:16 AM EDT

The British pound rose sharply after the Scottish independence vote indicated Scotland would remain in the United Kingdom, while Wall Street's overnight gains and Alibaba Group's red-hot initial public offering underpinned Asian shares.

The cheer was expected to spread to European bourses, where financial spreadbetters predicted Britain's FTSE 100 .FTSE would open up by 78-79 points, or 1.2 percent; Germany's DAX .GDAXIwas seen opening 70-72 points, or 0.7 percent higher; and France's CAC 40 .FCHI was expected to rise by 13-14 points, or 0.3 percent.

"The old market adage of 'buy the rumour sell the fact' may still hold because if you're leaving it to this morning to buy on post referendum euphoria you may be getting in at the top," Capital Spreads dealer Jonathan Sudaria said in a note to clients. 

Though the nationalists won Scotland's biggest city, Glasgow, they failed to meet expectations in other constituencies as the country spurned independence in its historic referendum.

Sterling GBP=D4 was last up 0.4 percent at $1.6460 after rising as high as $1.6525, a marked turnaround from a 10-month low of $1.6051 touched just last week. The move helped push the dollar to a six-year high against the yen in cross trading, market participants said.

"This indirectly lifted the dollar against the yen, as sterling rose against the yen," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

Sterling rose more than two full yen against the Japanese currency to buy 180.66 yen GBPJPY=, its highest since late 2008. It was last up 0.9 percent at 179.70 yen.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added about 0.2 percent, supported by Wall Street's strong showing overnight, with both the benchmark S&P 500 .SPX and the Dow Jones industrial average .DJI setting intraday record highs. But the Asian index was still on track for a weekly loss of about 1.4 percent.

Sentiment was also underpinned by news that Alibaba Group Holding (BABA.N) priced its IPO at $68 a share, the top end of the expected range, raising $21.8 billion on Thursday in one of the largest-ever stock offerings.

Japan's Nikkei stock average .N225 ended up 1.6 percent at a seven-year closing high, giving it a 2.3 percent gain for the week. Shares got a tailwind from a weaker currency as the dollar pushed to a new six-year high of 109.46 yen JPY=.

The Nikkei also got a lift after Japanese Prime Minister Shinzo Abe said he aims to carry out as soon as possible reform of the country's $1.2 trillion public fund, the Government Pension Investment Fund (GPIF), in a reshuffle seen as good for equities.

"It's mainly short-term hedge funds chasing the market higher today by buying futures and index-heavy weight stocks," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

The dollar index .DXY, which tracks the U.S. unit against a basket of six major peers, stood at 84.333, edging up on the day after it climbed as high as 84.743 on Thursday, its strongest level in more than four years.

The euro wilted about 0.1 percent to $1.2906 EUR= after refreshing a 14-month low on Thursday, when it fell as low as $1.2834.

Risk sentiment was tempered by geopolitical clouds on the horizon. The U.S. Senate on Thursday approved a bill requested by President Barack Obama to arm and train moderate Syrian rebels fighting Islamic State militants, which now goes to Obama to sign into law.

Obama said the strong bipartisan support showed Americans were united in the fight against Islamic State militants.

"The emergence of the militant group ISIS in Syria and Iraq, and recent increase in efforts to fight it, has ushered in a new era of geopolitical risk" in the Middle East and North Africa, strategists at Barclays wrote in a client note.

"We think the stage seems set for a prolonged period of heightened regional uncertainty, with risks potentially spilling over into global oil markets and other economies and financial markets in the region," they said.

Brent crude held below $98 a barrel on Friday, but was set for its first weekly gain in three on the possibility of lower OPEC output. Brent LCOc1 edged down to $97.63 a barrel, while U.S. crude CLc1 slipped slightly to $92.94.

Spot gold XAU= inched lower to $1,224.40 an ounce after touching $1,216.01 in the previous session, its lowest since January 2.

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