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GLOBAL MARKETS-Asia stocks rise as crude oil extends rally on Iran worries

Published 2018-05-09, 08:37 p/m
© Reuters.  GLOBAL MARKETS-Asia stocks rise as crude oil extends rally on Iran worries
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* MSCI Asia-Pacific index up 0.2 pct, Nikkei rises 0.5 pct

* Asia stocks firmer after oil surge boosts Wall St energy shares

* Ringgit weakens after Malaysia vote upset

* Kiwi hits 5-mth low after dovish-sounding RBNZ statement

By Shinichi Saoshiro

TOKYO, May 10 (Reuters) - Asian stocks rose on Thursday, with energy shares leading the way as crude oil prices bolted higher after U.S. President Donald Trump's decision to pull out of a nuclear deal with Iran.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.2 percent, while Japan's Nikkei .N225 climbed 0.5 percent.

Elsewhere in Asia, a stunning election upset in Malaysia by the opposition sent ringgit forwards sliding more than 2 percent in offshore trade and the cost to insure against a Malaysian debt default rose.

Moody's ratings agency said the country was now in uncharted territory after an alliance of opposition parties led by former prime minister Mahathir Mohamad shocked the ruling coalition. surprise win by Mahathir's coalition party is likely to see an increase in policy uncertainty at least in the short term with market volatility likely to be higher," said Sian Fenner, lead Asian economist at Oxford Economics.

Special public holidays were declared for Thursday and Friday following the elections. highlighting investor worries, the U.S.-traded iShares MSCI Malaysia ETF EWM plunged 6 percent overnight to a one-year low.

Overnight, the Dow .DJI gained 0.75 percent and the S&P 500 .SPX climbed nearly 1 percent, with the S&P energy index .SPNY rallying 2 percent. .N

Energy shares soared as crude oil prices reached 3-1/2-year highs, with investors betting the U.S. withdrawal from a nuclear agreement with Iran would increase tensions in the Middle East and curtail oil supply.

Rising oil prices in turn pushed up U.S. Treasury yields by fanning inflation concerns. The 10-year Treasury note yield rose to a two-week high above the 3 percent threshold before pulling back a little to 2.996 percent US10YT=RR .

Shored up by higher yields, the dollar climbed to a 4-1/2-month high of 93.416 against a basket of six major currencies overnight .DXY . The dollar index was last at 93.130.

The New Zealand dollar retreated to a five-month low of $0.6930 NZD=D4 after the Reserve Bank of New Zealand (RBNZ) wrongfooted hawks by keeping interest rates steady and saying the next move might be a cut or a hike. RBNZ surprised markets with a slight dovish shift. It kept the official cash rate (OCR) on hold, as was widely expected, but notably allowed for the OCR to move 'up or down', rather than simply on hold – a slightly dovish development in our view," said Imre Speizer, economist at Westpac.

The euro crawled back to $1.1849 EUR= after slipping overnight to $1.1823, its lowest since late December. The dollar stretched its overnight rally to trade at 109.855 yen JPY= .

In commodities, U.S. crude futures CLc1 were up 0.4 percent at $71.44 a barrel after going as high a $71.50, the highest since November 2014.

Oil prices rose about 3 percent on Wednesday. O/R

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