Asian markets stabilise; Syria worries limit gains

Asian shares stabilised on Thursday after two days of steep losses as fears abated that U.S.-led forces would soon launch a military strike on Syria, and oil prices retreated from a six-month peak.

Gains in stocks were likely to be limited, however, with investors remaining on edge as the United States sketched out plans for multinational air strikes on Syria that could last for days.

Brent crude prices fell 0.7 percent to below $116 a barrel after climbing as much as 2.6 percent to a six-month high on Wednesday on concerns that any Western military strike could prompt retaliation and disrupt crude supply in the Middle East region, which pumps a third of the world's oil.

Gold held steady at around $1,416 an ounce after gaining as much as 1.2 percent to a 3-1/2 month high in the previous session's flight to safety.

"Wall Street's rebound will provide enough push for the market to regain some of the previous sessions' losses," said Dongbu Securities analyst Lee Eun-taek.

U.S. stocks rose overnight as energy shares rallied on the back of higher oil prices.

This helped soothe nerves in Asia, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.1 percent after falling 2.2 percent in the previous two sessions.

Japan's Nikkei share average advanced 0.5 percent.

In the foreign exchange markets, the safe-haven yen cut some of the recent chunky gains that had taken it to a three-week high against the dollar.

That paring of yen positions also helped the euro edge off a 1-1/2 week low. The dollar last bought 97.85 yen, having risen from 96.81, while the euro traded at 130.45 yen, up from 129.66.

"We assume that NATO military action is still the likely scenario even if relatively limited in scope. Until there is more clarity, our bias is to keep positioning low at the moment," strategists at BNP Paribas said in a note.

Emerging markets, which have been hurt by an expected reduction in stimulus measures by the U.S. Federal Reserve, took further battering from the rising geopolitical tensions.

Brazil raised its benchmark interest rate to a 16-month high of 9 percent on Wednesday in part to help shore up its currency.

In Asia, Indonesia's central bank board will meet on Thursday amid speculation it will have to raise interest rates again to defend the fast-falling rupiah, now its lowest since April 2009.

The Indian rupee fell sharply on Wednesday to hit a record low of 68.85 to the dollar, closing down 3.7 percent on the day in its biggest single-day percentage fall in nearly 18 years.

In the latest attempt to support its currency, India's central bank said it will provide dollars directly to state oil companies "until further notice".