Asian stocks rebound

Floor traders walk inside the trading hall of the Hong Kong Stock Exchange March 2, 2011.

Credit: Reuters/Bobby Yip

By Ian Chua

SYDNEY | Thu Mar 3, 2011 1:51am EST

SYDNEY (Reuters) - Upbeat U.S. economic news helped lift Asian stock markets on Thursday, while crude oil prices fell in choppy trade on reports of a possible peace deal for Libya.U.S. stock index futures were also firmer, suggesting a positive start for Wall Street.
Markets kept a wary eye on developments in Libya as the struggle between Muammar Gaddafi's loyalists and rebels who have taken swathes of Libya intensified, but one report said Gaddafi and the president of the Arab League had agreed to a peace plan from Venezuela's President Hugo Chavez.
The worry was that growing instability in key Middle East oil producing countries could signal another threat to global supplies. Bank of America Merrill Lynch analysts argue the oil shock from Libya ranks as the eighth largest supply shock since 1950.
"The stability of the region has gone through a major shock and the ripples are going to be felt for a while," said Carl Larry, president of Oil Outlooks and Opinions based in Houston.
Gold, often sought in times of heightened geopolitical tensions and as an inflation hedge, slipped to around $1,424 an ounce, down from a record high just above $1,440.
Tokyo's Nikkei average .N225 closed 0.9 percent higher, a day after it suffered its biggest fall this year, while stocks elsewhere in Asia .MIAPJ0000PUS gained 1.1 percent.
"It's too early to be optimistic because concerns about rising oil prices will likely persist," Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets, cautioned.
"But investors might have oversold yesterday, so they may buy back stocks with good fundamentals."
South Korea's KOSPI .KS11, which plumbed a three-month low on Wednesday, was among the best performers in the region, advancing 2.2 percent on the day.
Hong Kong's Hang Seng index .HSI gained 1.0 percent, while China's Shanghai Composite Index .SSEC was steady.
U.S. crude fell 1.2 percent to $101.06 a barrel, reversing earlier gains, but was still not far from the recent peak at $103.41. Brent crude shed 1.4 percent to $114.71, pulling away from the February 24 high near $120.
Wall Street eked out small gains on Wednesday with the S&P 500 index .SPX ending 0.2 percent higher after the Federal Reserve's Beige Book suggested economic activity picked up in 2011 and a private survey pointed to strong private-sector hiring.
The private-sector jobs report bodes well for the influential non-farm payrolls data due on Friday.