Sydney: Asian shares were flirting with fresh highs on Thursday, while a sharp rise in British and German bond yields rippled through sovereign debt markets globally.
An early hurdle looms in the shape of the preliminary HSBC China manufacturing PMI for April due at 0145 GMT. Forecasts are for it to hold steady at 49.6 but the recent run of softer numbers has markets braced for disappointment.
For now, momentum favours risk trades with share indices across Asia marking new peaks day to day. Japan`s Nikkei rose 0.3 percent to a 15-year high with foreign investors seen buying financials and other large cap shares.
Stocks in South Korea gained 0.5 percent to near a four-year top, while MSCI`s broadest index of Asia-Pacific shares outside Japan was not far from its highest since early 2008.
Chinese stocks had touched seven-year highs on Wednesday, with investors emboldened by a commentary in state media saying the bull market "has just begun".
Wall Street had ended firmer on Wednesday as Visa`s potential expansion into China and upbeat U.S. housing data helped investors look beyond a mixed bag of quarterly earnings.
The Dow rose 0.49 percent, while the S&P 500 gained 0.51 percent and the Nasdaq 0.42 percent.
Government bonds went the other way as UK gilts took a hammering when minutes of the Bank of England`s last policy meeting were taken as less than dovish by a crowded market.
Yields on British 10-year paper jumped almost 15 basis points in the largest one-day rise since August 2013, as investors brought forward the day when the BoE might lift interest rates.
The selling spread to Treasuries where yields on 10-year notes climbed to 1.984 percent after touching a 3-1/2 week high yield of 1.993 percent.
German 10-year yields shot to 0.163 percent, doubling in three sessions and hit in part by talk Greece`s creditors might be ready to make concessions.
German Chancellor Angela Merkel meets Greek Prime Ministers Alexis Tsipras on the sidelines of an EU summit later on Thursday but a breakthrough seems unlikely.
Sterling was a major beneficiary of the spike in UK yields, hitting its highest in over a month early on Thursday.
The pound climbed as far as $1.5080 , while the euro slid to 71.20 pence , reaching levels not seen since mid-March. Sterling has since eased back to $1.5035, while the common currency remained pinned near the session low.
In contrast, the euro appeared to be tethered to the $1.0720-40 area , after an upside probe failed to break new ground. It last traded at $1.0726, stuck in the middle of a $1.0520-$1.0849 range seen in the past few weeks.
gainst the yen, the dollar drifted back to 120.00 yen for the first time in over a week, while the euro held firm at 128.65 yen , having reached a two-week high just shy of 129.00.
In commodity markets, spot gold was down at $1,187.85 an ounce having suffered its sharpest single-session loss since March 6 on Wednesday.
Oil prices were narrowly mixed in early trade. Brent was quoted 4 cents lower at $62.69 a barrel, while U.S. crude added 5 cents to $56.21.
