Asian Shares Rally Slows Ahead of Bank of England Rate Decision

A week-long rally across Asian stocks hit the brakes Thursday, with investors waiting to see whether the Bank of England's interest-rate decision would make or break further equity gains.

Japan's Nikkei Stock Average remained the biggest outperformer in the region, gaining 0.4% to add to its 7.7% ascent this week. Investors' hopes for fiscal-stimulus policies helped set the benchmark on track to scoring its best weekly performance so far this year.

Shares of videogame maker Nintendo Co. continued to soar, rising 9.8% on the craze around its "PokÃ© mon Go" app. That brings Nintendo's total gain this week to more 50%. Nintendo has a minority stake in the augmented-reality game.

But the euphoria in Asian equities from earlier in the week mostly dissipated on Thursday as investors stayed more cautious before the Bank of England's Monetary Policy Committee meets after Asian markets close.

The meeting "will probably will be the deciding factor on how the markets will react later today," said Tareck Horchani, a senior sales trader at Saxo Capital Markets in Singapore. "The market is pricing a cut."

In the rest of the Asia-Pacific region, Australia's S&P/ASX 200 was up 0.2%, Korea's Kospi was down 0.2% and Hong Kong's Hang Seng Index edged down 0.1%. China's Shanghai Composite Index lost 0.3%, and Singapore's Straits Times Index was off 0.1%.

Energy shares in Hong Kong, China and Australia sank after crude oil prices slumped overnight. U.S. oil prices plummeted to a two-month low after data showed U.S. inventories of crude oil and refined products were at a record high. Brent was recently trading at $46.67 per barrel in early Asia trade.

Meanwhile, Malaysian stocks fell after the country's central bank on Wednesday unexpectedly cut the overnight policy rate for the first time in seven years. The FTSE Bursa Malaysia KLCI was last down 0.3%.

In other markets, some sovereign Asian government bonds rallied, in another sign of investors' anticipation of fresh policy easing by global central banks. The yield on the 10-year Australian note slipped to 1.92%, while the yield on the 10-year Malaysian note sank to 3.56%. Yields sink when bond prices rise.

Asian sovereign bonds are rallying "on expectation that rates will stay low for a while and [investors] need the yield," Mr. Horchani said.

Write to Dominique Fong at Dominique.Fong@wsj.com

(END) Dow Jones Newswires

July 13, 2016 23:25 ET (03:25 GMT)

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