Wall Street and Europe on positive grounds

Main stock exchanges trade with a positive trend. In New York, Dow Jones earns 0.4 per cent and S&P500 mounts 0.6 per cent. NASDAQ, slides 0.1 per cent. In European bourses, London earned 1.3 per cent; Paris, 1.3 per cent; and Madrid, 0.7 per cent. Tokio climbed 0.1 per cent.

Asia

Asian stocks hit two-week highs on Friday and the yen slipped after comments from Federal Reserve Chairman Ben Bernanke reinforced expectations of a further U.S. interest rate cut, fuelling appetite for risk.

Those rate views were set to lift stocks in Europe as well, with financial bookmakers expecting opening gains of up to 0.5 percent for all three major equity indexes.

Oil steadied near $91 a barrel after shedding overnight gains on news that a fire-damaged Canada-to-U.S. pipeline could resume operation within days, while gold wallowed below $800 an ounce, dulled by the fall in oil.

Stock investors took heart after Bernanke told the Charlotte Chamber of Commerce that a resurgence in financial strains had dimmed the outlook for the U.S. economy, and the Fed would "have to remain exceptionally alert and flexible."

"Any indication of a rate cut is greatly received because if the U.S. economy achieves a soft landing, the market can hold up and move ahead next year," said Hans Kunnen, head of investment markets research at Colonial First State in Sydney.

"We all know that the housing sector is going to contract and hurt. The question is to what extent can you save the rest of the economy?"

Bernanke's comments came after weaker-than-expected new home sales and a surge in claims for new jobless benefits took the gloss off revised figures showing the U.S. economy grew at 4.9 percent in the third quarter, the best performance in four years.

Tokyo's Nikkei average ended 1.1 percent higher, while MSCI's measure of other Asia Pacific stocks climbed 1.4 percent by 0614 GMT to two-week highs.

Markets had risen a day earlier after Fed Vice Chairman Donald Kohn boosted rate cut talk by saying renewed financial market turmoil could slow the U.S. economy and the Fed had to be flexible.

Despite the recent rise, the MSCI index is set to fall by about 5 percent in November, its biggest monthly fall since May 2006, when it slid 6.6 percent.

The index was still down 9 percent from its Nov. 11 peak, but up 35 percent this year, more than three times the gains for MSCI's key world stock index.

BANKS MOSTLY UP

Bank stocks, eschewed by investors on fears of credit-related losses, were generally firmer thanks to hopes of a U.S. rate cut.

Japan's Mizuho Financial, South Korea's Woori Finance Holdings and Australia's Westpac Banking Corp all rose more than 2 percent, but Citigroup fell 3.1 percent in Tokyo after reversing early gains.

Big miners fared better in line with gains in copper prices as investors bet that lower U.S. rates would help boost economic growth and lift demand for industrial metals.

BHP Billiton rose 2.3 percent, Sumitomo Metal Mining climbed 7.8 percent, and Korea Zinc advanced 3.1 percent.

In Malaysia, plantations-to-energy group Sime Darby relisted at a 36 percent premium to its indicated price after a merger with two other palm-oil groups. It is now the world's largest listed palm-oil company by value.

YEN EASES

Against the backdrop of improving risk-taking appetite, the low-yielding yen slipped.

The dollar popped above 110 yen from an overnight low of around 109.45 yen, while the euro rose to 162.60 yen from Thursday's low near 161.50 yen.

Against the dollar, the single currency hovered near $1.4740 off the overnight high of $1.4845.

"Bernanke's remarks were almost the same as Kohn's. He sounded as if an interest rate cut in December was a done deal," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Bank.

"But the dollar is likely to be sold again if the market shifts its focus to growing concerns about credit market problems and the downside risks about the economy."

Despite strength in equity markets, Japanese government bonds rose as the market took its cue from U.S. Treasuries, which were boosted by weak U.S. economic data overnight.

The yield on the 10-year benchmark Japanese government bond eased 1.5 ticks to 1.47 percent as a result.

Money markets were in a bit of a bind especially South Korea and India, where official curbs on foreign borrowing as well as precautionary risk reduction by banks are taking a toll.