Shares to gain as Wall St rallies, oil pauses

WELLINGTON (Reuters) – Asian stocks are likely to rise on Friday, driven by strong rallies in British and U.S. stocks as oil prices retreated amid hopes that the Libyan crisis can be resolved.

The main Wall Street (.N: Quote, Profile, Research) indices rose by 1.6 percent to 1.8 percent, the best one-day gain in three months, albeit on weak volumes.

Investors took bets that the U.S. payrolls data due later on Friday will show healthy gains, underscoring a steady improvement in the world’s largest economy.

Oil prices eased from 2-1/2-year highs on profit taking, and on speculation Libya would accept a plan to resolve its crisis.

Asian stocks listed on Wall Street (.BKAS: Quote, Profile, Research) rose 1.14 percent.

British (.FTSE: Quote, Profile, Research) shares rose 1.5 percent on the falling oil prices while European (.FTEU3: Quote, Profile, Research) shares eked out a 0.2 percent gain, as the market was stunned by the European Central Bank signaling that it may hike rates as early as April, much earlier than expected.

The euro jumped across the board, rising to a four month high on U.S. dollar, after early rate hikes were signaled. The greenback rose against the yen on the strong data.

Japanese markets are set for a strong start, with Nikkei futures traded in Chicago closing 135 points above the last closing level in Osaka.

Short term support for the Nikkei is seen at its 13-week moving average of 10,425, with resistance around its 25-day moving average of 10,589, just above Thursday’s close. Australian stocks are also expected to gain, with share price index futures up 49 points to 4,851, a 44 point premium to the close of the underlying S&P/ASX 200 (.AXJO: Quote, Profile, Research) index.

(Reporting by Adrian Bathgate)