(MENAFN- AFP) Asian markets surged Wednesday, while the dollar held overnight gains as buying confidence returned to trading floors ahead of an expected US interest rate hike.
After more than a week of sharp losses, equities enjoyed some healthy buying after a rally in New York and Europe that was fuelled by upbeat economic data and a rare rally in oil prices.
However, the crude gains were short-lived and resumed their downtrend in Asian trade Wednesday.
The Federal Reserve is expected later Wednesday to hike borrowing costs at its policy meeting, ending months of speculation and uncertainty on global markets. And while the move would be considered a reason to sell, analysts said the rise had largely been priced in to assets.
"Markets had time to prepare for this day, with investors winding back risk ahead of the event," Tim Schroeders at Pengana Capital in Melbourne told Bloomberg News.
However, he added: "What happens after the Fed rate hike is difficult to tell especially since we're coming into a quiet period around Christmas and New Year. Volatility will probably continue."
The case for a hike has grown stronger over the past year as the US economy continued to show it was enjoying a healthy recovery. The argument was reinforced Tuesday by data showing year-on-year consumer inflation hit two percent in November, matching the Fed's target rate.
The news lifted the dollar to 121.66 yen in New York from around 120.80 yen earlier Tuesday in Asia, while the euro dipped to $1.0930 from above $1.10.
In Tokyo on Wednesday it edged up against the Japanese unit but eased slightly against the single currency, which won a measure of support from a better-than-expected reading on investor confidence in Germany, Europe's biggest economy.
Regional stock markets were all higher in early exchanges, with Tokyo climbing 2.1 percent by lunch, Sydney up almost two percent and Seoul 1.6 percent higher.
Hong Kong was up two percent, ending a nine-session losing streak -- its worst run of selling since 1984.
The gains in Asia tracked similar advances in Europe, where Paris and Frankfurt added more than three percent and London gained 2.5 percent. And in New York the Dow, Nasdaq and S&P 500 climbed around one percent.
- Key figures around 0300 GMT -
Tokyo - Nikkei 225: UP 2.1 percent at 18,961.83 (break)
Hong Kong - Hang Seng: UP 2.0 percent at 21,700.15
Sydney - S&P/ASX200: UP 1.9 percent at 5,004.70
Euro/dollar: UP to $1.0944 from $1.0930 late Monday.
Dollar/yen: UP to 121.71 yen from 121.66 yen
New York - Dow: UP 0.9 percent at 17,524.91 (close)
London - FTSE 100: UP 2.5 percent at 6,017.79 (close)
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