HONG KONG: The Tokyo and Hong Kong stock markets edged higher in cautious Asian trade on Tuesday due to a slight easing in oil price pressures amid moves by the United States and OPEC to reassure markets. Tokyo's Nikkei was up 0.38 percent in the morning and Hong Kong's Hang Seng had climbed 0.31 percent, while Sydney and Shanghai were flat. Crude prices slipped after the United States refused to rule out tapping its oil reserves to ease the impact of high oil prices. The Financial Times also reported that OPEC members Kuwait, the United Arab Emirates and Nigeria were joining Saudi Arabia in raising output to allay fears of a supply crunch. Their efforts come as markets grow increasingly worried about the possibility that unrest across a swathe of North Africa and the Middle East could start to destabilise oil giant Saudi Arabia. New York's main contract, light sweet crude for April delivery, fell 41 cents to $105.03 per barrel in Asian trade, while Brent North Sea crude for April dropped 13 cents to $114.91.
"Risk aversion is likely to be the dominant theme until there is reasonable certainty that oil prices can retreat to $90 or below," Ric Spooner, chief market analyst at CMC Markets in Sydney, told Dow Jones Newswires.
"The threat of a permanent rise in oil prices has hit at a time when equity markets were priced on the assumption of solid earnings growth over the next 12 to 18 months.
"Oil at over $100 per barrel for any length of time is likely to lead to reduced expectations for consumer discretionary spending and corporate profitability." Markets got a weak lead from the United States, where the volatility in Libya and the Middle East spooked Wall Street. The Dow Jones Industrial Average dropped 0.66 percent, the S&P 500 index fell 0.83 percent and the tech-rich Nasdaq Composite dropped 1.40 percent. Gold prices eased slightly after hitting a new all-time record high of $1,440.32 in London on Monday. Gold opened at $1,430.80-$1,431.80 an ounce in Hong Kong down from Monday's close of $1,437.00-$1,438.00. On currency markets, the dollar moved narrowly against the yen, with trading lacklustre. The euro was supported by anticipation of a likely interest rate rise by the European Central Bank, despite renewed worries about European sovereign debt after Moody's downgraded Greece and yields on Portugal's 10-year bonds hit a euro-era high of 7.5 percent. The dollar fetched 82.28 yen in Tokyo morning trade, little changed from 82.25 yen in New York late Monday. The euro eased slightly to $1.3966 from 1.3971. The single European currency was marginally higher at 114.91 yen compared to 114.82 yen.
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