Asian markets mostly up on US stimulus hopes

HONG KONG: Asian markets were mostly up on Friday amid hopes that the US Federal Reserve will embark on a fresh round of economic stimulus and Greece will return a pro-austerity government in weekend polls.

However, with Spain's borrowing costs hitting another record high despite a $125 billion bank bailout, traders remain on edge.

Tokyo shares rose 0.14 percent, Hong Kong climbed 0.62 percent, Sydney advanced 0.10 percent and Shanghai was 0.38 percent higher but Seoul slipped 0.95 percent.

In the United States weekly initial jobless claims rose more than expected. Consumer prices fell in May for the first time in two years, driven by falling gasoline prices, but core inflation rose 0.2 percent for the third straight month.

The numbers sparked speculation that the US central bank would start a third round of stimulus known as quantitative easing in a bid to kickstart the world's biggest economy.

"Hopes for more easing steps bolstered risk appetite" in New York, said Takashi Hiroki, Monex Inc. chief strategist in Tokyo. "Market sentiment is brighter," he told Dow Jones Newswires.

On Wall Street the three main indexes advanced on hopes for more cash flooding into the market. The Dow gained 1.24 percent, the S&P 500 climbed 1.08 percent and the Nasdaq added 0.63 percent.

"Sentiment seemed to strengthen on hopes that underwhelming data might compel the Fed to implement another round of quantitative easing when they meet next week," said Briefing.com.

In Britain finance chief George Osborne and Bank of England governor Mervyn King said they would flood banks with cheap funds in a bid to jump-start lending to households and businesses and to fend off a potential storm from Europe.

But while investors absorbed the possibility of fresh cash in the system Europe's troubles tempered sentiment.