Asian stocks rise amid heightened global appetite for risk as oil prices fall

HONG KONG, Oct. 7 (Reuters) – Asian stocks rallied on Thursday, welcoming a late recovery on Wall Street after US politicians appeared close to a temporary deal to avoid a federal debt default and while Russia reassured Europe about gas supplies, easing market volatility.

Oil prices also fell from multi-year highs reached a day earlier, having been a major contributor to the sell off of stocks this week, as benchmark yields for the US Treasury and major currencies stabilized in a climate calmer.

The largest MSCI index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) rose 1.25% at the start of the session, regaining ground lost in recent days for little change over the week.

“Strong increases in energy prices have clearly contributed to the latest rise in bond yields, which has been accompanied by weakness in equity markets around the world,” Capital Economics analysts wrote in a note.

As oil prices fell on Thursday, benchmarks in Korea (.KS11) rose 1.3%, in Australia (.AXJO) up 0.64% and in Hong Kong (.HSI) in 2% increase.

The Japanese Nikkei (.N225) rose 0.89% and US equity futures, S&P 500 e-minis, gained 0.42%.

Chinese markets have remained closed for a holiday.

U.S. crude fell 0.34% to $ 77.17 a barrel, extending a decline from Wednesday night after hitting a seven-year high of $ 79.78 earlier today. Brent crude was flat at $ 81.04 a barrel, after its three-year high of $ 83.47 also hit on Wednesday.

The falls followed an unexpected rise in US crude inventories.

Gas prices also fell, a day after Russian executives indicated that supplies to Europe could increase, which contributed to a late rally on Wall Street after declines in European stock markets. Read more

The Dow Jones Industrial Average (.DJI) rose 0.3%, the S&P 500 <.SPX gained 0.41% and the Nasdaq Composite (.IXIC) added 0.47%, also boosted by a proposal from the Senior Senate Republican, Mitch McConnell, to authorize an extension of the federal debt ceiling until December.

Fears that the United States might default on its debt weighed on equities as well as rising energy prices.

The next US event for global investors is the release of wage data on Friday, with investors predicting that a reasonable figure will mean the US Federal Reserve will begin to scale back its massive stimulus package at its November meeting.

The dollar was stable, not too far from the 12-month highs reached last month against a basket of currencies, and held steady at a 14-month high against the euro.

The benchmark 10-year Treasury yield was 1.5415% from Wednesday’s three-and-a-half-month high of 1.573%.

“Sentiment and momentum are variable, causing a shift in risk appetite,” Westpac analysts wrote on US rates.

“The price action is tied to stock market gyrations, the Fed’s hawkish outlook and stagflation fears as oil spikes and debt ceiling politics threaten the national economy.”

Spot gold was little changed, trading at $ 1,761.89 an ounce.

Editing by Lincoln Feast.

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