Volkswacht Bodensee - Asian markets extend gains ahead of Ukraine-Russia talks

While the conflict in eastern Europe continues to rage, traders have grown increasingly confident about shifting back into stocks as diplomats work to find a peaceful solution.

Analysts also said markets have been helped by the lack of any alternative investment for quality returns.

Focus is now on Istanbul, where officials from the warring parties are due to hold their first face-to-face talks since March 10, with Ukraine President Volodymyr Zelensky saying they must bring peace "without delay".

Vladimir Putin has called Moscow's military goals "demilitarisation and denazification of Ukraine", as well as the imposition of neutral status.

Neutrality and the future status of Donbas -- which has been occupied by Russia -- could be on the agenda, with Zelensky admitting "it is impossible to liberate all territory by force, that would mean World War III, I fully understand and realise that".

But he stressed: "Ukraine's sovereignty and territorial integrity are beyond doubt. Effective security guarantees for our state are mandatory."

Hopes that a way out could be found were lifted last week when senior Russian general Sergei Rudskoi appeared to scale back Moscow's campaign by saying the first phase of the war was over and the "main goal" was now on controlling Donbas.

All three main indexes on Wall Street posted healthy gains, and Asia followed suit.

Tokyo, Hong Kong, Sydney, Seoul, Singapore, Taipei and Jakarta rose, though Shanghai, Manila and Wellington dipped.

"A lot of negative news is already reflected in market pricing and investor positioning, and we still see upside in US equities for the rest of 2022," Solita Marcelli, at UBS Global Wealth Management, said.

And market strategist Louis Navellier added that "growth forecasts of both overall earnings and GDP remain positive for the next several quarters on the strength of the post-pandemic reopening".

Still, uncertainty remains rife on trading floors as soaring inflation ramps up expectations that the Federal Reserve will act increasingly more aggressive in tightening monetary policy.

That has sent Treasury yields rocketing, fuelling fears of a sharp economic slowdown.

There has been some respite for inflation expectations thanks to a sharp drop in oil prices, which has come on the back of a Covid lockdown in Shanghai, China's biggest city and financial hub of 25 million people.

The news sparked fears of a sharp drop-off in demand in the world's number two economy, sending both main contracts down about seven percent Monday, and they extended the losses in Asian trade.

On currency markets the yen rose against the dollar but remains under pressure and around six-year lows after the Bank of Japan said it will buy 10-year government bonds to keep yields from running above its target.

The move reinforced the divergence between the BoJ and Fed as US officials battle to rein in inflation.

- Key figures around 0250 GMT -

Tokyo - Nikkei 225: UP 0.6 percent at 28,110.73 (break)

Hong Kong - Hang Seng Index: UP 0.4 percent at 21,776.59

Shanghai - Composite: DOWN 0.1 percent at 3,210.00

West Texas Intermediate: DOWN 1.5 percent at $104.41 per barrel

Brent North Sea crude: DOWN 1.8 percent at $110.50 per barrel

Euro/dollar: UP at $1.0995 from $1.0991 late Monday

Pound/dollar: UP at $1.3100 from $1.3095

Euro/pound: DOWN at 83.90 pence from 83.91 pence

Dollar/yen: DOWN at 123.66 yen from 123.83 yen

New York - DOW: UP 0.3 percent at 34,955.89 (close)

London - FTSE 100: DOWN 0.1 percent at 7,473.14 (close)

R.Adler--BTB