Markets edge higher amid thin trades

Easing worries about Korean warfare support sentiments

Asian markets had a very good outing today as investors eyed softening of tensions on the Korean peninsula after the South's live-fire drill passed off without response from the North. Markets had slipped on the previous day as Seoul went ahead with the US-backed exercise on the island of Yeonpyeong, which prompted an emergency session of the UN Security Council.
However, concerns eased as Pyongyang said only that it would show restraint while news that US negotiator Bill Richardson had persuaded the North to permit the return of UN nuclear inspectors also lifted sentiment. The markets had slipped on across the board profit selling as the benchmark indices had stuck two and a half year highs in the last week.



The US dollar gave up some of its recent gains on strong risk appetite. The greenback was also hurt after China said it was happy with measures taken by the European Union and International Monetary Fund to ensure financial stability. Chinese Vice Premier Wang Qishan said Tuesday at the start of Sino-EU trade talks that Beijing would help some EU members combat the sovereign debt crisis, state media and Dow Jones Newswires reported.

The Japanese market closed in green with the stocks hitting a fresh 7-month high on increasing optimism about sustaining global economic recovery and strong US economic data in last few days. Bank of Japan kept its monetary policy stance unchanged as it gauged the impact of its various stimulus support measures. Members of the Bank of Japan's policy board voted unanimously to maintain the overnight call rate unchanged at 0-0.1% as expected and broadly maintained their economic assessment. The central bank also kept the size of its asset purchase program unchanged at 35 trillion yen and restated its commitment to continue buying assets and providing liquidity. This supported the sentiments further and the benchmark Nikkei 225 Index closed at 10,371, up 154.12 points or 1.51%.

The Australian markets soared on gains in the overseas indices and strong commodity prices. A recommendation from the Policy Transition Group that current and future state and territory royalties on coal and iron ore should be credited against federal taxes, helped mining companies post impressive gains after a moderation in the last session. The benchmark S&P/ASX 200 closed with a gain of 35.3 points, or 0.8%, at 4771.9 near its day's high.

In China, property stocks bounced sharply to propel the broad markets higher. Funds were quick to up the ante after a sharp drop in the last session as the They and some media reports forecast the country's urban housing prices may jump 20 percent next year. The key Shanghai Composite Index surged by nearly 2% to end at 2,904.1 points, breaking above the key 2900 levels yet again.

In Mumbai, the key benchmark indices clocked modest gains as reports of higher advance tax payment by top Indian firms and firm global stocks boosted sentiment. The market breadth was strong. Metal, consumer durables, realty and banking stocks rose. But, index heavyweight Infosys reversed gains after hitting a record high. Another index heavyweight Reliance Industries (RIL) extended gains in late trade. As per provisional figures, the BSE 30-share Sensex was up 170.98 points or 0.86% to 20,059.86.

In other markets, South Korea's Seoul Composite surged 0.83%, Hong Kong's Hang Seng spiked 1.83% while Taiwan's Taiex added 0.67%.

Crude oil managed to add further gains to top a high of $89.77 per barrel. Oil has been rising on the back of higher oil prices caused by freezing weather across the northern hemisphere and an expected jump in demand for petrol over Christmas.