CORRECTED-GLOBAL MARKETS-Asian shares at 18-month highs; Nikkei finishes year up 18%

(Corrects to clarify June 19 milestone in paragraph 4 was in
2018, and changes slug for media clients to Wrapup 3)
* MSCI Asia ex-Japan +0.05%, trims gains
* European shares expected to fall after recent rallies
* Nikkei ends year up more than 18%, fell 12.1% in 2018
* China rate reform, retail sales boost bullish mood
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith
SHANGHAI, Dec 30 (Reuters) - A broad gauge of Asian share
markets rose to an 18-month high on Monday as Chinese equities
gained, while oil touched three-month highs on a combination of
U.S. crude inventory drawdowns, trade optimism and unrest in the
Middle East.
But European shares were expected to open lower as investors
take a breather from recent rallies.
In early European trade, the pan-region Euro Stoxx 50
futures STXEc1 were down 0.16% at 3,764, German DAX futures
FDXc1 were down 0.22% at 13,291.5 and FTSE futures FFIc1
were down 0.11% at 7,578.5.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose to its highest since June 19, 2018, before
trimming gains. It was last up 0.05%.
Chinese blue chips .CSI300 , which had started the day
lower, were up 1.13% in afternoon trade, bolstered by a report
that 2019 retail sales are forecast to rise 8% and expectations
that a new benchmark for floating-rate loans could lower
borrowing costs and boost flagging economic growth.
But Australian shares .AXJO finished 0.25% lower as
investors continued to consolidate recent gains.
Japan's Nikkei stock index .N225 finished its last trading
day of the year down 0.76%. The index gained 18.2% in 2019 after
dropping 12.8% last year.
Easing trade war worries and reduced uncertainty over the
United Kingdom's plans to leave the European Union after British
elections returned a strong Conservative majority have offered a
lift to global equities this month, helping the broad MSCI Asia
index rise more than 6% and putting it on track for its
strongest month since January.
Kay Van-Petersen, global macro strategist at Saxo Capital
Markets, said that limited liquidity near the year-end and the
easing of U.S.-China trade and Brexit uncertainties has "just
left us drifting up higher. So even if there is a pullback... I
don't think it's going to be significant by any means."
Global equity markets gained late last week, with the S&P
500 .SPX and the Dow Jones Industrial Average .DJI closing
at records on Friday.
The Dow ended 0.08% higher at 28,645.26 and the S&P .SPX
edged up just 0.11 points to 3,240.02. The Nasdaq Composite
.IXIC lost steam at the close, falling 0.17% to 9,006.62.
Oil also gained on Friday, with prices posting their fourth
consecutive weekly gain to steady around their highest in three
months.
On Monday, global benchmark Brent crude LCOc1 was up 0.31%
to $68.37 per barrel, while U.S. West Texas Intermediate crude
added 0.13% to $61.80, reversing an earlier decline.
Oil's gains followed news of U.S. air strikes in Iraq and
Syria against Kataib Hezbollah, an Iran-backed militia group.
U.S. officials said Sunday that the attacks were successful, but
warned that "additional actions" may be taken to defend U.S.
interests. But Stephen Innes, strategist at AxiTrader, said that the
rise of shale oil production in the United States would offset
any geopolitical risks.
"Shale can really ramp up more volumes to accommodate any
shortfall that could possibly be triggered by escalation in
Syria," he said, adding that an upsurge in populism in Iraq
posed a larger risk to markets.
Iraq's oil ministry said on Sunday that the halting of oil
production at Iraq's southern Nassiriya oilfield by protestors
would not affect the country's exports and operations.
Oil prices were also supported by a bigger-than-expected
decline in crude inventories in the United States, the world's
biggest fuel consumer. Stockpiles fell by 5.5 million barrels in
the week to Dec. 20, far exceeding a 1.7-million-barrel drop
forecast in a Reuters poll, the government data showed on
Friday. Gold also continued its run-up, boosted by a weak dollar,
after posting its best week in more than four months on Friday
amid thin trading volumes.
The precious metal on Monday rose 0.3% to $1,515 per ounce
on the spot market. XAU= GOL/
In the currency markets, the dollar was 0.27% lower against
the yen at 109.11 JPY= and the euro EUR= was up 0.23% on the
day at $1.1201.
The dollar index .DXY , which tracks the greenback against
a basket of six major currencies, was down 0.14% to 96.786.
The yield on benchmark 10-year Treasury notes US10YT=RR
was at 1.877% compared with its U.S. close of 1.873% on Friday,
while the two-year yield US2YT=RR edged down to 1.5812%
compared with a U.S. close of 1.589%.

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