Stocks up as oil dips for fourth straight session

By Anshuman Daga

SINGAPORE (Reuters) - Asian shares edged up on Wednesday to extend a fragile two-day rise, as oil dipped for the fourth straight session, signalling lower costs for firms following a plan by top exporter Saudia Arabia to raise crude output.

The dollar steadied against the yen after slipping the previous day, while Japanese government bond futures rallied on Wednesday, boosted by receding expectations for aggressive interest rate increases in the United States and Europe.

"We believe that risks to growth have been overlooked by the markets, and expect the focus to shift back to growth sooner rather than later," UBS economists said in a note.

"To make verbal support on the dollar credible, policy action will be necessary to back up the market's view on future rate hikes. However, as both the housing market and the outlook of financial corporations remains at risk, any tightening in rates is unlikely soon," it said.

By 3:50 a.m. British time, dollar stood at 107.96 yen, steady from late U.S. trading on Tuesday, having retreated from a four-month high of 108.59 yen hit on trading platform EBS on Monday.

The euro was steady from late U.S. trade at $1.5517, having rebounded from a one-month low of $1.5303 hit on Friday.

Soaring energy costs pushed U.S. producer prices sharply higher last month and U.S. housing starts fell to their lowest in 17-years, data showed on Tuesday, highlighting the dilemma the Federal Reserve faces in trying to tackle high inflation amid signs of weak economic growth.

Japan's Nikkei share average ended the morning session 0.4 percent higher, led by electronic equipment makers. NEC Electronics rallied 10 percent after Goldman Sachs upgraded its recommendation on the stock, citing possible forecast-beating earnings from the company.