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Asia300

India shares jump to two-month high as Fed minutes give cloudy rate outlook

MUMBAI (NewsRise) -- Indian shares jumped to two-month highs, as a fall in U.S. yields and the dollar following the Federal Reserve's December meeting minutes spurred demand for emerging market assets.

The benchmark BSE Sensex index rose 0.92% to 26,878.24, its highest level since Nov.10. With the exception of information technology, all sector indexes rose Thursday. Twenty-six of the 30 Sensex constituents ended higher, with Infosys and Tata Consultancy Services figuring among a handful of losers. The broader NSE Nifty 50 index advanced 1.02% to 8,273.80 points.

The December Fed minutes released overnight suggested an unclear outlook for short-term U.S. interest rates. While the minutes pointed to the possibility of higher inflation and faster growth requiring a quicker pace of rate hikes, it noted that the uncertainty regarding fiscal and other economic policies had increased, and it was "too early to know" how changes in these polices would alter the economic outlook. Most Fed members reiterated that a gradual pace of rate hikes would be appropriate in the coming years.

"The global movement is largely reflected by the dollar index and with its drop, we see some sort of strength in our markets," said Krish Subramanyam, co-head of equity advisory at Altamount Capital. "There are indications for a couple of rate hikes in 2017, which threaten foreign fund outflows from emerging markets. However, the minutes suggest a faster rate of growth for the economy, which is a positive."

U.S. yields and the dollar, which have been rising since Donald Trump's victory in U.S. presidential elections amid expectations of an accommodative fiscal policy, declined. The U.S. 10-year yield dropped to its lowest level in almost a month in Asia trading on Thursday, and the dollar index extended losses.

U.S stocks rose for a second day on Wednesday, with the S&P rallying 0.6%. In Asian markets on Thursday, China's Shanghai Composite ended 0.21% higher while South Korea's Kospi fell 0.18%. Hong Kong's Hang Seng rose 1.46%.

India's Tata Motors advanced 3.18% to 501.95 rupees after the company's British luxury unit Jaguar Land Rover reported a 30% on-year rise in U.S. retail sales for December, the best-ever for the company.

Sun Pharmaceutical Industries rose 0.89% to 643.25 rupees. India's biggest drug maker said after market hours on Wednesday it got positive results to phase-3 clinical trial for Seciera, a drug for the treatment of dry eyes.

Mahindra & Mahindra pared intraday losses to end 0.39% higher at 1,225.95 rupees. Earlier in the day, India's biggest sport-utility vehicle maker said Bank of New York Mellon had sold its entire 5.39% stake in the company on Wednesday.

Banking stocks, which witnessed choppy trading this week following sharp lending rate cuts, rose. ICICI Bank added 2.41% to 257.15 rupees and State Bank of India rose 1.05% to 245.45 rupees.

Infosys and Tata Consultancy declined 0.19% to 996.40 rupees and 1.85% to 2,334.55 rupees. CNBC-TV18 television network reported that two lawmakers had re-introduced a bill backing changes to H1-B visa program that allowed workers from India to fill high-skilled job vacancies in the U.S. Both the companies report December earnings next week.

---Dhanya Ann Thoppil

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