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Wednesday 3 November 9:24 PM
CORRECT: Euro Down At $1.2721, Not $1.7127
SINGAPORE (Dow Jones)--Asian stock prices and the dollar rose after a slow start Wednesday as George W. Bush seemed headed toward re-election as U.S. president. Stock markets rose briskly across the region and crude oil prices rebounded from early lows as two U.S. networks called the battleground states of Florida and Ohio for the Republican incumbent. Democratic challenger John Kerry's campaign insisted the race wasn't over and that a huge number of provisional ballots would show the Democrat the winner in Ohio, the pivotal state this year. That appeared to set up a potentially rancorous fight withover hundreds of thousadns of "provisional ballots" in Ohio, which could take weeks to sort through. But the markets weren't waiting. "Judging from the region's key markets, there's a short-term upward bias for a Bush victory," said Mark Bowden, Singapore-based head of Southeast Asia equities at Merrill Lynch. Equity prices perked up, he said, after looking "noncommittal" in early trading, when extremely high turnout at the U.S. voting booths led to speculation of a Kerry win. A Bush victory is seen as offering a continuation of policies and growth momentum, while Democrat Kerry is viewed as more protectionist on trade. The president's more aggressive policies on terrorism and the Middle East were among factors buoying oil prices. "Overall markets are up rather than down as people feel the uncertainty is getting out of the way," said Khiem Do, Hong Kong-based head of Asian equities at Baring Asset Management Ltd. "As long as investors don't have to wait through a long, drawn-out situation, I don't see a shifting of portfolios." Shares in Taiwan climbed 1.8% on the main index, propelled by technology issues rising in anticipation of a post-election rally in U.S. stocks. In Seoul, the Korea Composite Stock Price Index, or Kospi, gained 1.7%. "After the news that Bush is likely to be re-elected, the Kospi extended its gains in late afternoon," said Oh Hyun-Seok, an analyst at Samsung Securities. "Bush is expected to maintain his former political stance as well as market-friendly economic policies." Tokyo markets were shut Wednesday for a national holiday. Hong Kong's Hang Seng Index reversed an early 0.1% decline to end 0.7% higher, while Singapore's Strait Times Index rose 1.1%. The dollar rebounded from early pro-Kerry declines on relief that a clear winner was emerging. Bush is seen as holding a more pro-trade view, compared with Kerry's perceived trade protectionism and calls to limit outsourcing by U.S. firms. Around 1000 GMT the dollar was at Y106.71, up from the day's low of Y106.02, while the euro traded at $1.7127, down from $1.2750. But analysts and traders said the dollar's underlying downtrend would likely reassert itself after elector fever cools, when attention returns to the huge U.S. trade and budget deficits. December crude oil futures on the New York Mercantile Exchange's after-hours Access trading platform were at $50.26 a barrel late in the Asian day, up 64 cents from the U.S. close Tuesday after having traded down to $49.02/bbl when Kerry was the favorite. U.S. Treasury prices edged down from their overnight highs in cautious early trade, then slid on an an afternoon flurry of sales when the networks projected Bush would take Ohio. By 0640 GMT, 10-year bonds were at 100 22/32, down from 101 18/32 early in the Asian day. Beyond the U.S. electoral gyrations, international fund managers said Asia's domestically driven economic growth mean regional equities will hold their ground, no matter who ended up in the Oval Office. "Asia is a good recovery story and is increasingly decoupling from the U.S.," said Hans Goetti, senior investment counselor for Asia Pacific at Citigroup Private Bank. "Asia's valuations are also attractive, so a topdown portfolio change is unlikely, although specific industries could be affected by who wins the election." Eleanor Wan, Hong Kong-based fund manager at Allianz Dresdner Asset Management, said the U.S. election was more a "political topic rather than economic story" for Asian stocks. "I don't see a big impact on Asian markets as either presidential candidate will look at maintaining U.S. influence on the global economy."
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