Asia shares climb after Fed meeting

HONG KONG - Asian markets rallied Thursday, taking up the baton from a record-breaking Wall Street, after the Federal Reserve delivered a broadly upbeat outlook on the US economy and suggested interest rates would remain low for some time.

The dollar edged up marginally against the yen after a New York sell-off, while oil remained elevated on fears over the crisis in Iraq as the United States considers air strikes against militants sweeping through the country.

Tokyo jumped 1.38 per cent, adding to the more than one per cent gains over the previous two days and despite a stronger yen.

Hong Kong gained 0.43 per cent, Sydney rallied 0.97 per cent, Seoul put on 0.27 per cent and Shanghai was 0.14 per cent higher.

After a closely-watched meeting, the Fed's policy committee said it would slash a further US$10 billion (S$12.5 billion) off its monthly bond-buying and maintain its "highly accommodative" monetary policy of record low interest rates.

Bank policymakers said in a statement economic growth "has rebounded in recent months" from the first-quarter contraction, while household spending and business investment were both rising.

However, while that had been expected, there was no mention of an earlier hike in interest rates than mid-2015.

Investors had been hoping that a recent run of upbeat economic data - including rising inflation - would prompt the bank to consider bringing forward its timetable.

Fed boss Janet Yellen told reporters there is "no mechanical formula" for when the Fed will lift benchmark rates following the end of stimulus.

Analysts also noted the central bank did not significantly increase its inflation forecast, "suggesting that the recent pickup in inflation doesn't materially change its near-term outlook for monetary policy", said a note from IHS.

'Tokyo up despite weak dollar'

Wall Street reacted positively.

The S&P 500 climbed 0.77 per cent to tap another record high, while the Dow gained 0.58 per cent and the Nasdaq rose 0.59 per cent The prospect of interest rates staying low for at least another year sent the dollar falling to 101.91 yen in US trade Wednesday from 102.17 yen earlier in Tokyo.

But the greenback picked up slightly in Asia on Thursday, buying 101.98 yen in early trade.

The euro was US$1.3590 and 138.53 yen, against US$1.3593 and 138.52 yen in New York.

"The Fed didn't say much that the market hadn't already perceived; hence US stocks' generally positive ... reaction," Nicholas Smith, equity strategist at CLSA, told Dow Jones Newswires.

"More interesting is the fact of Japan shares' divergence from the dollar/yen market gyrations; the market is up strongly despite a weaker dollar," he added.

He said this showed sentiment in Japan is picking up, "especially since the fears about the more harmful effects of the April 1 consumption tax hike".

On oil markets, prices were mixed but still at nine-month highs after Iraq's government appealed for the US to carry out air strikes on jihadists who on Wednesday seized another oil refinery and more territory in the north.

There are fears the rebel offensive could lead to a civil war in the oil exporter, choking crucial supplies.

In early Asian trade, US benchmark West Texas Intermediate for July rose 29 cents to US$106.26 while Brent crude for August eased one cent to US$114.25.

Gold fetched US$1,276.88 an ounce at 0215 GMT in Asia compared with US$1,270.69 late Wednesday.