Asia stocks rise, yen steady but outlook hazy

Asian stocks edged up and the yen slipped from a 15-year high on Thursday, after a small rally on Wall Street driven by successful European bond auctions gave investors an excuse to lighten up on their bets.
However, the two biggest issues on investors' minds — European financial stability and the slowing U.S. recovery — held bargain hunting in check and risk taking at a minimum.
Australia was the exception, where rising equities led Asia on a solid labour market report, which also drove the Australian dollar to a four-month high.
Meanwhile, the yen's 11% rise has battered depressed Japanese equity valuations, with stocks trading at the cheapest relative to expected earnings since December 2008.
With uncertainty rife about how much more the yen's climb has to run, investors were cautious about rebuilding their Japanese stock portfolios just yet.
"Worries about Europe were soothed somewhat following a bond auction in Portugal, and that prompted short-covering in the market, which was hit hard by the advance in the yen versus the dollar and the euro yesterday," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
"But market players were reminded that Europe's sovereign concerns are continuing and that's not something that will improve right away," Segawa said.
The Nikkei share average was up 0.7% but was still down 3.2% for the quarter and is the third-worst performing Asian stock market this year.
Japanese stocks were trading at 12.9 times expected earnings one year ahead, the lowest since December 2008, when markets were in the midst of the financial crisis, Thomson Reuters I/B/E/S data showed.
The MSCI index of Asia Pacific stocks outside Japan was up 0.5%, led by early gains in the materials sector. The index has risen 9.8% in the quarter so far, slightly outperforming the all-country world index's 8.6% rise.
The yen was steady with global equity markets edging higher, with the dollar at 83.79 yen, nearly unchanged on the day. The dollar hit a 15-year low on Wednesday around 83.34 yen.
The Australian dollar was a big mover on the day, rising 0.4% to US$0.9224, the highest since May. Australian employment in August was surprisingly strong, lifting the stock market and knocking bond futures lower.
"It's good news in a sense it means household income and spending will probably grow," Michael Blythe, chief economist at CBA in Sydney, said of the surge in Australian employment. "But it comes at the risk of rising inflation pressure as well."