Trading got off to a tentative start in the region following modest losses on Wall Street Wednesday. Attention, however, fell on Spain's auction of 10-year bonds later Thursday as markets continue to assess the country's ability to service its sizable debt burden. On Tuesday, fears about Spain's financial woes briefly subsided after it managed to attract decent demand for its short-dated debt offering.
"There will be a lot of attention on tonight's Spanish 10-year bond auction and the result will give a good indication on how the market will perform in the next few days," said Miguel Audencial, sales trader at CMC Markets, in a note.
"There is potentially a good upside if yields are low. However if Spain's cost of debt breaches the 6% barrier," a selloff in equities and commodities is likely, Audencial said.
Japan's Nikkei Stock Average fell 0.7%, Australia's S&P/ASX 200 climbed 0.2%, South Korea's Kospi Composite was off 0.1% and New Zealand's NZX-50 was off 0.1%.
Dow Jones Industrial Average futures were up 26 points in screen trade.
Stocks in Sydney rose slightly, and the Australian dollar jumped after Xinhua News Agency reported that China will steadily boost liquidity supply through cuts in the banks' reserve requirement ratios, an increase in reverse repurchase agreements and through the maturity of central bank bills; the late-Wednesday report, which quoted an unnamed central bank official, adds to recent market speculation that China will continue to deliver policy easing steps to ensure a soft landing for the world's second biggest economy.
The Australian dollar was recently fetching US$1.0373, from US$1.0355 just before the news report. Resources stocks in Sydney, which are highly correlated to China's growth-cycle, tacked on modest gains; BHP Billiton was up 0.7% and Rio Tinto added 0.3%
Exporters were mostly lower across the region. In Tokyo, Toyota Motor lost 0.2%, Sony fell 1.0%, while Hyundai Motor dropped 1.0% and LG Display lost 1.3% in Seoul.
Regional tech shares were largely down after losses for IBM and Intel in the U.S. session Wednesday as investors there homed-in on a few negatives in their quarterly results. LG Electronics fell 1.9% and Samsung Electronics was off 0.1% in Seoul, while Tokyo Electron eased 0.1% in Tokyo.
The euro traded in a tight range against the U.S. dollar as most traders were content to sit on the sidelines ahead of the outcome of the Spanish debt auction.
The single currency was at $1.3128 against the greenback from $1.3123 late Wednesday in New York, and at Y106.95 against the yen, from Y106.61. Meanwhile, the yen lost ground after Japan's trade balance swung to a deficit in March. The dollar was at Y81.47, from Y81.25.
Spot gold was at $1,641.50 per troy ounce, off 50 cents from its New York settlement on Wednesday. May Nymex crude oil futures were up 13 cents at $102.80 per barrel on Globex.
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