HONG KONG, July 30: Asian stocks rose on Wednesday as investors wagered that the worst news from US banks might be over and took heart from a strengthening dollar and falling oil prices.

Regional share markets reversed Tuesday’s falls after reassessing Merrill Lynch’s $5.7 billion write-down and share sale as a signal of a turning point in the credit crisis.

News from top global steelmaker ArcelorMittal, which unveiled a forecast-beating second-quarter net profit of $5.84 billion, showed that despite ballooning prices for iron ore and coal steelmakers have passed price rises on to consumers, regardless of slowing economic growth.

Arcelor’s results helped boost shares in Asian competitors Tata Steel and POSCO more than 5 per cent.

Japan’s Nikkei average closed up 1.6 per cent, led by Matsushita Electric Industrial Co, which gained 5.5 per cent on the back of strong earnings.

Stocks elsewhere in Asia, gauged by MSCI’s index, rose 1.5 per cent by 0650 GMT, with a strong showing from Australia’s benchmark S&P/ASX 200 index, which rose 1.8 per cent as bank stocks rebounded from this weeks sharp falls.

Hong Kong’s Hang Seng rose more than 2 per cent, helped by Chinese oil refining giant Sinopec, which gained almost 6 per cent after a Reuters report that it had received a $4.4 billion subsidy to offset a first-half refining loss.

Taiwan’s TAIEX ended 0.8 per cent firmer, while Shanghai’s SSEC Composite ended 0.5 percent higher.

In India the 30-share BSE index provisionally closed 3.6 per cent higher on Wednesday, led by Reliance Industries and Housing Development Finance Corp.

The high price of oil has spurred inflation, troubled oil refiners and savaged airlines around the world this year, so a $25 slump in crude prices over the last two weeks towards three-month lows has brought some respite to equities.

US crude oil hovered around $122 a barrel in Asian trade, dipping to $121.70 in London, reflecting mounting evidence that high prices and a souring US economy were cutting into energy demand. Buyers struggled to put a floor under their steepest slide in a year and a half.

The reason prices are coming off is that there are expectations for inventory builds... on reduced demand, said Robert Nunan, a risk management executive at Tokyo-based Mitsubishi Corp.

The weakening oil price has been bolstered by the dollar, which was steady near Tuesday’s one-month high of about 108.30 yen with an unexpected rise in US consumer confidence offsetting a steeper-than feared fall in Japanese industrial output.

The US dollar index, which measures the dollar’s performance against a basket of six currencies, firmed up to 73.360 in Asia, nearing its highest level in about a month. The index eased back a little in European trade.

The US currency could extend gains if more economic data this week further assuage market concerns about the economy falling into a recession, traders say.

Investors will closely watch the ADP national employment survey due later in the day to help reassess forecasts for key US jobs numbers due out on Friday.

The market has been altering excessively pessimistic views about the US economy, said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank.

Key data this week such as the second quarter growth data and the jobs report later in the week could encourage some investors to shift funds back into the dollar, though it depends on the outcome, said Inoue.

Trade in Japanese government bonds was subdued as attention turned to the US data.

The 10-year yield slipped to 1.525 per cent, touching Tuesday’s three-month low, with some investors looking to buy bonds before another anticipated fall in yields. But traders said others were biding their time in case positive stock market sentiment pushes yields up.—Reuters