Asian stocks hit a 12-week high on Wednesday and the euro inched ahead as investors took comfort from solid US and European company earnings,while the Australian dollar eased after a sharp slowdown in inflation. Major European stocks rose 0.4 per cent in early trade,after shares hit a five-week closing high a day earlier as several European firms beat earnings forecasts. Germany's economy minister said on Wednesday that his country now has a sustainable recovery,further boosting market sentiment. The MSCI index of Asia Pacific ex-Japan stocks gained 0.4 per cent to its highest since May 5,largely shrugging off a fall in US consumer confidence to its lowest since February. Japanese stocks jumped 2.7 per cent,helped by stronger earnings and a weaker yen. Shares of Canon jumped 5.7 per cent after the world's No. 1 camera maker reported its best profit in seven quarters,though it may face a tougher second half due to Europe's economic woes and the yen's strength. Japan's earnings season gets into full swing this week,with Sumitomo Mitsui Financial Group and Nippon Steel Corp reporting later in the day and Sony Corp on Thursday. "Risk-money appears to be coming back,albeit slightly,after UBS and Deutsche Bank reported bullish earnings. The weaker yen is also helping the market," said Hiroaki Kuramochi,chief equity marketing officer at Tokai Tokyo Securities. Thomson Reuters index of regional shares was virtually flat. Overnight on Wall Street,the S&P snapped a three-day winning streak after mixed earnings reports and as a fall in consumer confidence showed worries over the US job market persisted. In recent weeks,largely positive earnings reports had eased concerns that the global economy may stall in the second half as fiscal stimulus runs out and austerity programs hit consumer spending. In the United States,78 per cent of the 175 companies in the benchmark S&P 500 index have reported earnings above analysts' expectations,according to Thomson Reuters data. While strong earnings have buoyed markets in recent weeks,the reporting season is nearing an end. Investors may then turn their focus back to the slowing US economy. Yale University economist Robert Shiller,a well-known prognosticator in real estate markets,said Insider on Tuesday that the US economy could enter into a double-dip recession as growth stalls. "For me,a double-dip is another recession before we've healed from this recession . the probability of that kind of double-dip is more than 50 per cent," Shiller said. Most economists,however,do not see a slide back into recession yet,though growth may be more sluggish. Investors were waiting for results from the likes of the Boeiing Co and Rockwell Automation later in the day. AUSSIE FALL The euro hit a two-month high against the yen as signs of resilience in the euro zone economy and solid European bank earnings helped boost investor risk appetite. The single currency inched up 0.2 per cent to 114.49 yen,its highest since mid-May. Against the dollar,the euro was up 0.2 per cent at $1.3021,hovering near an 11-week high of $1.3047 struck on Tuesday. The Australian dollar fell from $0.9010 to $0.8970 after the country reported a weakening in core inflation to its lowest in over three years,all but ruling out the need for an interest rate rise next week and possibly for the rest of the year. August inter-bank futures rallied,pricing out chances of a rate hike by the Reserve Bank of Australia at its next monthly policy meeting on August 3. Markets had been factoring in a 30 per cent chance of a hike before the data. Spot gold hovered near $1,163 an ounce,a day after falling 2 per cent to a near three-month low when the drop in US consumer confidence and an option expiry prompted heavy selling. Oil prices rose 14 cents to $77.64 a barrel.
