* Spreadbetters see lacklustre starts at European bourses
* Strong US factory data bolsters dollar ahead of jobs
* Australian central bank holds steady as expected
* Oil gives back some of Monday's gains
By Lisa Twaronite
TOKYO, Oct 4 Asian shares shrugged off a
sluggish start and pushed higher on Tuesday, with Japanese
markets leading the way after an upbeat U.S. manufacturing
survey bolstered the dollar.
But the cheer was unlikely to spread to Europe, where German
markets will reopen after a holiday to rekindled fears about the
stability of the country's largest lender.
U.S. stocks slumped overnight, with Deutsche Bank
shares resuming their slide as hopes faded that the bank would
reach a swift deal with the U.S. Department of Justice over a
fine of up to $14 billion for mis-selling mortgage-backed
"The return of German markets today is likely to see
Deutsche Bank's shares come under the microscope again after the
face-ripping rally on Friday that saw a 14 percent swing in the
share price," wrote Michael Hewson, chief market analyst at CMC
Markets in London.
Hewson expected Britain's FTSE 100 and Germany's DAX
to begin the day modestly lower, and France's CAC 40
to open nearly flat.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.2 percent in afternoon trade. Markets
in China are on holiday this week.
Australian shares ended 0.1 percent higher after
Australia's central bank kept its cash rate steady at 1.5
percent on Tuesday, a widely expected decision as it assesses
the impact of its May and August rate cuts.
"We think the case for no more cuts is strengthening," says
Paul Bloxham, chief economist Australia at HSBC. "Economic
growth is strong, commodity prices have risen, and the drag from
the mining investment decline is set to fade."
Japan's Nikkei stock index gained 0.8 percent,
getting a tailwind as the dollar rose against the yen after
strong U.S. data.
On Monday, the Institute for Supply Management (ISM) said
that its index of U.S. national factory activity rose to 51.5 in
September from 49.4 in August, indicating that the sector is now
"The upbeat U.S. survey is lifting expectations for a strong
dollar trend, which helps earnings concerns recede for Japanese
exporters," said Hikaru Sato, senior technical analyst at Daiwa
The upbeat U.S. factory numbers had a mixed impact on U.S.
shares overnight. While strong survey reassured investors
worried about the strength of the U.S. economy, it also
emcouraged bets that the Federal Reserve will raise interest
rates as early as this year. Higher rates, while good for the
dollar, could pressure equities markets.
Fed funds futures imply that investors slightly favour the
chance for an interest rate increase in December.
The dollar index, which tracks the greenback against a
basket of six major peers, added 0.3 percent to 95.970.
Against the yen, the dollar added 0.6 percent to 102.25
, breaking above the 102 level for the first time since
Sept. 21, while the euro was 0.2 percent lower at $1.1187
The main economic indicator this week is Friday's nonfarm
payrolls report. Employers are expected to have added 170,000
jobs in September, according to the median estimate of 59
economists polled by Reuters.
Sterling nursed losses not far from 31-year lows and was
last at $1.2841. The pound plunged after the UK set a
March deadline to begin the formal process for Britain's exit
from the European Union.
Crude oil futures took a breather following sharp gains
overnight as Iran urged other oil producers to join OPEC in
supporting the market.
U.S. crude was down 0.6 percent at $48.52 a barrel
after closing up 1.2 percent on Monday. Brent was down
0.4 percent at $50.68 after gaining 1.4 percent overnight.
(Additional reporting by Wayne Cole in Sydney and Ayai Tomisawa
in Tokyo; Editing by Eric Meijer and Simon Cameron-Moore)