Asian shares, oil and higher-yielding currencies rose on Friday as hopes for a global economic recovery drove up appetite for riskier assets, but traders were cautious ahead of U.S. monthly job data.
Sterling remained under pressure as political uncertainty deepened in Britain, with a third senior minister quitting the government and calling on Prime Minister Gordon Brown to step down to improve his party's chances in the next general election.
U.S. markets climbed on Thursday as optimistic investors focused on positive signals seen in U.S. weekly jobless benefits and productivity data, downplaying bearish evidence that American consumers, the lynchpin of global exports, are cutting spending.
U.S. nonfarm payrolls data due later in the day are expected to show U.S. employers cut 520,000 jobs in May, lower than 539,000 in April, but the unemployment rate is forecast to rise to 9.2 percent from 8.9 percent in April.
A much worse-than-expected report could dampen expectations that the worst is over for the global economy, hopes that have pushed stock markets from Seoul to London sharply higher since early March.
If the numbers are better than expected investors will get confirmation that the economy's really improving but there's worry about what will happen if the figures are worse than consensus, said Yumi Nishimura, a deputy general manager of the investment advisory section at Daiwa Securities SMBC.
The MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rose 0.9 percent as of 0215 GMT, rebounding from a 1.9 percent fall on Thursday. The index looked set for a rise of close to 3 percent on the week, which would take its gains since hitting early March lows to around 63 percent.
Resource shares were among the leading gainers after oil prices surged to a seven-month high on hopes that the global recession had bottomed out. Japanese oil and gas field developer Inpex <1605.T> surged 6.8 percent.
Australian-listed shares of BHP Billiton
The deal effectively scuppered a $19.5 billion bid by China's Chinalco
Japan's Nikkei average <.N225> rose 0.6 percent, while Hong Kong <.HSI> rose half a percent. Elsewhere, markets such as in Taiwan <.TWII> and Singapore <.FTSTI> posted more modest gains.
Gains in Asian shares were also underpinned by data on Thursday showing fewer U.S. workers filed new claims for jobless benefits for a third straight week last week and productivity rose faster than expected in the first quarter.
An upgrade by RBC Capital Markets of the U.S. banking industry to overweight also helped drive Wall Street higher, with major U.S. indexes gaining around 1 percent.
ECB ON HOLD
Still, not all signals have been positive.
Most U.S. retailers posted disappointing May sales as recession-weary shoppers cut spending, despite early signs of stabilization such as improving consumer confidence. A sustained rebound in consumer demand is vital to a global economic recovery.
In another worrisome sign, U.S. mortgage rates surged to their highest in almost six months in the latest week, despite government efforts to keep rates at low levels that will help the hard-hit housing market begin to recover.
The caution is being reflected by central banks worldwide. The European Central Bank on Thursday kept interest rates on hold at a record low of 1 percent.
However, President Jean Claude-Trichet left the option open for further easing after the ECB slashed forecasts for the 16-country economy this year and said growth would not return until mid-2010.
The Bank of England also left interest rates steady at 0.5 percent on Thursday and said it was on track to complete 125 billion pounds of quantitative easing by August to kickstart bank lending again. But economists expect it may have to do even more to lift Britain's economy out of recession.
Riskier assets that depend on improving global demand still gained nonetheless.
U.S. crude futures rose 42 cents to $69.24 a barrel, building on a rally of more than 4 percent on Thursday.
Also helping drive up oil was Goldman Sachs
In currency markets, investors switched to higher-yielding plays, though moves were tempered ahead of the U.S. jobs data.
The dollar index <.DXY>, a gauge of the greenback's performance against a basket of six major currencies, fell 0.1 percent to 79.401.
The euro edged up 0.1 percent from late U.S. trade to $1.4196, crawling toward a five-month peak of $1.4339 hit on EBS earlier this week after the ECB kept rates on hold.
After falling as low as $1.6106 earlier, sterling was little changed from late U.S. trade at $1.6140.
The resignation of senior government minister James Purnell on Thursday is seen as a direct attack on Brown and increases the possibility of a challenge to his leadership of the ruling Labour Party. A general election is due within a year.