Asian stocks dipped on Friday, but still headed for their best weekly gain in four months as hopes the global economy could not get any worse continue to bolster riskier assets.
The MSCI index of Asia-Pacific stocks outside Japan looks set to surge nearly 20 percent in March to mark its second best month in its 21-year history since December 1993, though the latest global poll by Reuters shows strategists still expect a tough 2009.
European shares were set to open flat to lower following a six-session winning streak.
Investors appeared to be latching on to the view that mixed economic data, as opposed to completely horrible, was enough motivation to pick up stocks at low valuations and lock in yields on heavily discounted bonds.
They also have been heartened by further clarity on rescue efforts for U.S. banks, though whether any policy would ultimately be successful in stimulating global demand in the near term was anyone's guess.
U.S. crude prices took a breather on Friday, trading below $54 a barrel, after climbing global equity markets and a rosy outlook for demand from China broadly lifted raw materials prices, particularly industrial metals.
Asia has a lot to gain with the U.S. looking better. Now whether the U.S. really is better is another question, said Tim Rocks, equity strategist with Macquarie Securities in Hong Kong.
In China you have some evidence stimulus policies are working, but whether that's enough and whether we take another leg down is still unclear.
The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> fell 0.3 percent on Friday after earlier hitting a 11-week high. That was still good enough for about a 9 percent gain on the week, its largest weekly rise since late November.
That would also mark the index's third consecutive weekly gain that had been led by the technology sector. Companies such as LG Electronics <066570.KS> have surged on factors that have included cost cutting, consolidation and increased market share at the expense of global rivals.
The materials and the consumer discretionary sectors have also done well, though telecoms and health care sectors have lagged.
Japan's Nikkei share average <.N225> dipped 0.1 percent on Friday after earlier touching a 2-1/2-month high. Car makers and exporters of technology, such as Honda Motor Co <7267.T> and Canon Inc <7751.T> helped add support to the index.
A sanguine outlook for demand and higher metals prices supported mining stocks, helping the Australia's benchmark S&P/ASX 200 index <.AXJO> climb 0.7 percent.
We've hit the bottom, we're making our way up, said Stuart Smith, a Bell Potter Securities private client advisor in Australia.
ARE WE REALLY AT THE BOTTOM?
The R word used more frequently among fund managers and dealers has been recovery rather than recession, especially with the MSCI all-country world index <.MIWD00000PUS> climbing more than 20 percent in the last three weeks.
However, the picture from the economic data is not as clear.
A gauge of U.S. capital spending unexpectedly spiked in February, though the number of workers continuing to collect state unemployment benefits climbed to a record.
In Japan, contracting consumer prices beckoned deflation and deepening recession while a larger-than-expected fall in February retail sales were more signs of gloom.
Still, Japanese government bonds were pressured by the Nikkei's recent gains. The 10-year JGB future was down 0.27 point.
The yield on the benchmark 10-year U.S. Treasury note was steady at 2.75 percent after a relief rally overnight following an auction of new seven-year notes saw respectable demand.
In New Zealand, government bond yields eased slightly after a surge in the previous day prompted the central bank to deny talk it was holding an emergency meeting over the two-week long selloff in the debt market. The key five-year swaps rate eased to around 4.95 percent from 5.02 percent.
The ABF pan-Asia government bond exchange traded fund <2821.HK> was up 1 percent.
With the fiscal year end approaching, Japanese businesses were bringing some overseas cash home, putting upward pressure on the yen. The dollar was down 0.3 percent to 98.38 yen.
The euro was up 0.3 percent to $1.3565.
U.S. light crude slipped 64 cents to $53.70 a barrel on Friday, after having touched a 2009 high in the previous session on stronger equities, which the market hopes signal a recovery in energy demand down the road.