World Mkts: Market yo-yo heads up again as credit fears ease

HONG KONG: Nervy stock markets firmed on Friday after credit rating agency Standard & Poor's said an end to subprime related write-downs was in sight, triggering a rebound in financial shares. After a day when share prices dropped sharply, the dollar sank below 100 yen, gold futures topped $1,000 an ounce and oil hit a record $111 a barrel, the bears backed off. Early on Friday, the dollar came out of its skid and climbed back towards 101 yen , U.S. crude oil slipped 0.5 percent to $109.77 and spot gold buyers regrouped at $994. "(Foreign exchange) market players have achieved what they set out to achieve when they broke technically important targets at 101 yen and 100 yen and have now bought back a little," said Kengo Suzuki, a currency strategist at Shinko Securities. The euro which has hit repeated record highs against the dollar, inched back below $1.56. S&P, one of the ratings agencies under fire for failing to see the credit crisis coming, called a halt to the dollar-selling on Thursday by saying subprime write-downs could reach $285 billion, but noted that the end of the write-downs "was now in sight" for large financial institutions. A further boost to market sentiment came from Democratic Rep. Barney Frank of Massachusetts, who unveiled a bill aimed at getting the U.S. government involved in buying distressed mortgages. The Dow Jones industrial average closed up 0.29 percent on Thursday. Japan's Nikkei average was up 1.2 percent by 0106 GMT on Friday, while MSCI's index of other Asian stock markets added 0.9 percent. Asian investors worry the U.S. economic slowdown means weaker demand for Asian exports and a weak dollar denting U.S. buying power. With stocks far cheaper than six months ago, any sign of an end to the downturn makes many shares look like bargains. Australia's S&P/ASX 200 index rose 1.4 percent, spurred by miners such as BHP Billiton, up 2.9 percent, and iron ore prospector Midwest Corp Ltd , which jumped 31 percent after China's Sinosteel Corp launched a A$1.2 billion ($1.1 billion) hostile takeover bid. The renewed hopes for the U.S. economy brought a rapid retreat to U.S. Treasury debt prices . But after the volatile start to the year, not everyone was convinced. "If the 'End is in Sight' headline sponsored by S&P's view on subprime losses is the excuse for equities' strength and Treasuries' weakness, then we have surely entered the anteroom of Dante's Inferno," said BNP Paribas credit analyst Brett Williams in an e-mailed note to clients. Shinko's Suzuki said the rating agency's opinion had eased some worries about more losses at financial institutions from credit market turmoil, but investors will remain cautious until the market sees quarterly earnings reports from financial firms. Major U.S. investment banks such as Goldman Sachs, Lehman Brothers and Bear Stearns are scheduled to report first-quarter earnings next week. Gold market bulls saw the pause in buying as a mere lull before a renewed assault on the $1,000 milestone. "Providing oil prices maintain a dizzy height and the U.S. continues to suffer, it looks extremely likely that gold will test the $1,000 level and likely break through it," said Darren Heathcote of Investec Australia in Sydney.