GLOBAL MARKETS-Foreign funds boost Asia stocks; dollar squeezed

* Nikkei up 1.1 percent, MSCI Asia ex-Japan up 1 percent

* Dollar index near 15-month low

* Aussie near 15-month hit to dollar; boosts M&A talk

* Euro resilient despite Portugal woes

* Gold retreats from record, crude steady

By Alex Richardson

SINGAPORE, March 25 (Reuters) – Stocks rose on Friday as
optimism about upcoming company earnings encouraged foreign
buyers back into Asian markets, and the dollar retreated as
investors sold the low yielding currency in favour of riskier
assets.

The euro steadied despite a political crisis in Portugal
that prompted a downgrade from ratings agency S&P and added to
concerns over Europe’s sovereign debt crisis.

“The market is treating many of these downgrades as
rearguard actions which are already well discounted and the
dollar is under pressure broadly,” said Todd Elmer, currency
strategist at Citi in Singapore.

“This will continue to support the euro even if we do see
some marginal negative news on the sovereign debt crisis.”

Financial bookmakers forecast major European share markets
to open up 0.7-0.8 percent, while S&P 500 futures were up
0.4 percent, pointing to a firmer opening on Wall Street.

Gold retreated from a record struck on Thursday as unrest in
the Middle East and North Africa and a nuclear crisis in Japan
continued to support the metal’s safe-haven appeal.

Japan’s Nikkei rose 1.1 percent, rounding off a week
of gains as foreign investors scooped up battered shares, with
analysts saying some technical indicators showed the market
heavily oversold.

The index is down 7 percent from its close on March 11, when
a massive earthquake and tsunami struck northeastern Japan.

The disaster left 27,400 people dead or missing, crippled a
nuclear power plant that has been leaking radiation and cut
power to millions of homes and factories.

“More than 60 percent of stocks on the Tokyo stock
exchange’s main board are trading below their book value,” said
Hiroichi Nishi, general manager at Nikko Cordial Securities.

“So it’s time to buy back shares while watching problems at
the nuclear plant carefully.”

FOREIGN BUYERS

Foreign investors bought a net 891 billion yen ($11 billion)
of Japanese stocks last week, capital flows data from Japan’s
Ministry of Finance showed on Friday, the highest weekly total
recorded in the data that goes back to 2005.

Foreigners were net buyers in other Asian markets, including
South Korea and Thailand.

“With U.S. equities rising on solid earnings it looks as if
risk appetite improving,” said a trader for a major Japanese
bank in Tokyo.

MSCI’s index of Asian shares outside Japan
was up 1 percent, with the tech sub-index up 2
percent, following gains on Wall Street, where hopes of healthy
corporate earnings lifted the S&P 500 nearly 1 percent.

The index remains down around 1 percent on the year,
underperforming the MSCI World index which is up
nearly 3 percent.

Strong buying of the Australian dollar fuelled talk of M&A
activity, with the benchmark index rising 0.9 percent
and rumoured takeover target Woodside Petroleum up 2.6
percent.

“There has been some quite sizable buying of Aussie currency
with a view there may be some imminent large cap corporate
activity in our market,” Shaw Stockbroking senior dealer Jamie
Spiteri said.

“That has seen takeover talk BHP may make a move on Woodside
resurface.”

The Australian dollar traded around $1.0218, within
sight of a 29-year high of $1.0257 scaled on Dec. 31. The
dollar’s weakness extended across a basket of major currencies,
with the dollar index hovering close to a 15-month low.

EURO RESILIENT

The resignation of Portugal’s prime minister after
parliament voted down his minority government’s austerity plans
had hit the euro on Thursday on expectations it increased the
chances of the indebted nation needing an EU bailout.

But the single currency rebounded later, as European Union
leaders began a summit in Brussels. The euro held steady from
late U.S. trade on Thursday at around $1.4170 , after
dipping to as low as $1.4150 earlier on the news of Portugal
being downgraded.

Investors in the single currency took comfort from
expectations the European Central Bank will raise interest rates
next month, thereby boosting its yield advantage over the dollar
as the U.S. Fed is expected to keep policy ultra-loose for some
time yet.

The yen traded near 81 per dollar , a level it has
clung tightly to all week since a rare coordinated intervention
by leading central banks to curb its appreciation last Friday.

Despite optimism in stock markets, investors remained
concerned about violence in Libya and the Middle East and a
nuclear crisis in Japan, where engineers were battling to
stabilise a power plant damaged by the quake. Safe-haven buying
drove gold to a record $1,447.40 an ounce on Thursday.

Spot gold retreated to around $1,433.35 an ounce on
Friday.

Oil eased a little, with U.S. crude edging down 17
cents to $105.43 a barrel and Brent crude 8 cents lower
at $115.64, but analysts said the trend remained upwards.

“So long as ongoing problems in the Middle East continue to
elevate risks of a further supply disruption, there is a strong
likelihood of a price spike in the second quarter as the market
demands additional oil to meet summer demand,” said JP Morgan
analysts headed by Lawrence Eagles.

(Editing by Ian Geoghegan)

GLOBAL MARKETS-Foreign funds boost Asia stocks; dollar squeezed