Oil rose above $116 a barrel on Thursday, boosting recently beaten-down commodity prices and stoking inflation fears, which hit shares in the financial sector. European equities were expected to open slightly higher, led by strength in mining and energy shares with investors also bracing for euro zone gross domestic product data due later.
The MSCI Asia-Pacific ex-Japan index edged up 0.1 percent but is still down more than 30 percent since hitting an all-time high last November. It fell to a 17-month low on Wednesday. Australia's benchmark S&P/ASX 200 index rose 0.6 percent, led by top mining firms BHP Billiton Ltd and Rio Tinto Ltd. But the country's major banks all dragged on the index.
Hong Kong's Hang Seng index slipped 0.1 percent. Shanghai's composite index fell 0.6 percent, holding slightly above Wednesday's 19-month low, as data showed China's industrial output growth in the first seven months of the year slowed markedly.
COMMODITY BULLS BEWARE: Despite the rally in crude prices, many analysts do not think the short-term downward trend in commodity prices has changed, especially with growth data in both developed and emerging markets reflecting a slowdown.
Crude prices rose despite strength in the US dollar. The two have often traded very closely together, with a decline in one coinciding with a rise in the other. Yet, the euro was down 0.2 percent to $1.4887, creeping back down toward the six-month low around $1.4812 hit on Tuesday.
Against the yen, the dollar slipped 0.1 percent to 109.52 yen, about 1 yen below a seven-month high hit earlier in the week. Few indications in the market showed investors had regained their willingness to take bigger risks for higher returns, an environment that favours government bonds and hurts high-yielding currencies. Indeed, the Australian dollar was down 0.5 percent to US $0.8705 and the New Zealand dollar fell 0.4 percent to US $0.6995. Ten-year Japanese government bond futures climbed to a four-month high, having risen 4.3 percent in the last two months.
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