Asia shares gain on U.S. sales, oil firmer

SINGAPORE, Dec 14 (Reuters) Asia stocks rose on Thursday, led by consumer electronics makers such as Sony Corp. and LG Electronics after surprisingly strong retail sales figures from the United States, the biggest overseas market for Asian goods.

Shares in exporters were also boosted by a stronger dollar, after the U.S. currency rallied in the previous session on the retail sales data, which trimmed expectations for an interest rate cut by the Federal Reserve.

''Japanese stocks are getting a boost after the U.S. reported solid retail sales for November, which prompted investors to expect stronger Christmas sales,'' said Tsuyoshi Segawa, an equity strategist at Shinko Securities.

Oil prices edged up around a third of a percent, building on Wednesday's gains made after U.S. government data showed a surprising drop in crude stockpiles and ahead of an OPEC meeting in Nigeria to decide whether to deepen a production cut.

Australia's main share index hit a record peak for the third straight day. Qantas Airways Ltd. rose as much as 5.5 percent after agreeing to an A$11.1 billion takeover bid led by Macquarie Bank and private equity group Texas Pacific.

Tokyo's Nikkei rose 0.4 percent in morning trade, while MSCI's broadest index of shares elsewhere in Asia gained 0.6 percent by 0230 GMT.

Sony shares rose 2.1 percent, cameras and copiers maker Canon Inc. gained 0.9 percent and Matsushita, known for its Panasonic goods, was up 1.1 percent.

In Seoul, LG Electronics rose 1.6 percent and its flat screen joint venture LG Philips LCD 1 percent.

''One of the biggest risks for global markets is that the U.S.

economy will worsen significantly next year, but some of these worries have eased after the stronger-than-expected retail sales,'' said Korea Investment and Securities analyst Kim Hak-kyun.

''Stronger U.S. economic data is also supporting the U.S.

dollar, which tends to help exporters by giving them a more favourable foreign exchange rate.'' U.S. stocks finished flat on Wednesday, as gains made on the back of the retail sales numbers were cancelled out by falls in major energy consumers on higher crude prices.

FED RATE CUT? U.S. retail sales rose 1 percent in November, exceeding expectations and marking the strongest growth in four months, suggesting consumer demand has held up even as the housing market suffers a sharp slowdown.

Coming after a report showing healthy jobs growth in November, the data weakened the argument that the Federal Reserve would cut rates to stem any further weakness in the economy -- giving the dollar a lift.

But many market players still expect the Fed to cut rates in 2007, undermining the dollar's yield advantage even as other major central banks appear poised to boost interest rates.

U.S. interest rate futures are pricing a roughly 20 percent chance of a rate cut in the first quarter of 2007, down from about 30 percent before the retail sales data.

The euro was steady at $1.3215 at 0230 GMT, holding below the 20-month high of $1.3370 struck earlier this month. The dollar, which rose more than half a percent against the yen on Wednesday, eased to 117.45 yen in Asia from near 117.60 yen late in New York trade.

The single currency also lost a little ground to 155.20 yen from 155.35 yen late in New York and below an all-time high of 155.50 struck on Wednesday.

U.S. light crude for January delivery rose 19 cents to $61.56 a barrel, to add to 35-cent gains on Wednesday.

OPEC meets on Thursday to set output policy. Ministers from the producer cartel agree the market is oversupplied, but some say winter, when annual demand in the northern hemisphere peaks, is the wrong time to cut supply.

Underlining this argument, U.S. government data on Wednesday showed crude stocks fell by 4.3 million barrels last week as imports declined.

''OPEC seems to be edging away from cutting oil production at today's meeting and delaying any decision until January,'' said Tobin Gorey of the Commonwealth Bank of Australia.

Australia's S&P ASX 200 share index was up 1.1 percent at 5,550.5, after setting a new peak of 5,554.5.

Seoul's benchmark index, Hong Kong's Hang Seng, Taiwan's benchmark index and Singapore's Straits Times rose between 0.3 percent and 0.5 percent.

Gold was little changed around $627.60 an ounce.

The benchmark 10-year Japanese government bond yield rose 1 basis point to 1.615 percent.

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