TOKYO Asian shares held firm and U.S. stock futures edged higher in early trade on Friday as expectations of additional stimulus from the European Central Bank underpinned appetite for riskier assets, while the euro hovered near seven-month lows.
Benchmark share indexes in Japan .N225, South Korea .KS11 and Australia <AXJO all rose around 0.2 percent, though the broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS was almost flat due to the dollar's strength.
U.S. stock futures ESc1 rose 0.4 percent to their highest level since Nov. 9 after a market holiday on Thursday for Thanksgiving Day.
Although the U.S. holiday thinned global financial trade, the pan-European FTSEurofirst 300 index .FTEU3 gained 0.9 percent on Thursday to end at three-month high, led by German shares.
The European Central Bank meets next Thursday and most in the market expect it to expand its asset purchase programme and lower its deposit rate, the rate at which banks park excess funds with it.
Traders are now speculating that the ECB could cut rates more than the previous market consensus of a 0.10 percentage point cut.
The euro’s three-month overnight indexed swap (OIS) rate EUROIS fell to a new low around minus 0.28 percent, more than 0.15 percent below the current fixing level of the Overnight Eonia rate EONIA=.
With keeping money in the euro seen increasingly costly because of negative interest rates, the common currency was on the defensive in the foreign exchange market.
The euro traded at $1.0606 EUR=, not far from Wednesday’s seven-month low of $1.0565. It also stood near a seven-month low against the yen, last fetching 130.07 yen.
“You keep losing money by holding the euro. It is hard to see the euro rising. True, it is already heavily shorted but I expect the euro to fall towards parity with the dollar,” said a trader at a Japanese bank.
The yen was little changed against the dollar at 122.63 per dollar JPY=, showing no response to a series of Japanese economic data including jobless rate, which unexpectedly fell to a two-decade low of 3.1 percent.
Oil prices edged lower, with U.S. stockpile data published on Wednesday doing little to ease concerns about a supply glut.
U.S. crude futures CLc1 fell 1.1 percent to $42.57 a barrel as traders also unwound some of buying they had made after Turkey had shot down a Russian warplane earlier this week.
Brent futures LCOc1 edged down to $45.62 a barrel on Thursday, compared to their two-week high of $46.50 hit earlier this week.
Battered metal prices also rebounded as hedge funds covered their short positions for now.
Benchmark copper on the London Mental Exchange CMCU3 rose 1.9 percent on Thursday to $4,636.15 per tonne, recovering 4.3 percent from Monday’s 6 1/2-year low of $4,443.50.
Zinc CMZN3 and Nickel CMNI3 also jumped sharply on Thursday, helped by expectations of output cuts in China.
(Editing by Kim Coghill)