CORRECTED-GLOBAL MARKETS-China lifts Asian shares; oil up on drawdowns, Mideast tensions

(Corrects to clarify June 19 milestone in paragraph 2 was in
2018.)
* MSCI Asia ex-Japan +0.2%, reverses early losses
* China rate reform, retail sales boost bullish mood
* Brent crude 0.18% higher on drawdowns, trade hopes,
Mideast
worries
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith
SHANGHAI, Dec 30 (Reuters) - A broad gauge of Asian share
markets rose to the highest in 18 months on Monday as Chinese
equities gained, while oil hovered near three-month highs on a
combination of U.S. crude inventory drawdowns, trade optimism
and unrest in the Middle East.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was last up 0.2%, turning around from an earlier
loss. The index rose to its highest since June 19, 2018.
Chinese blue chips .CSI300 , which had started the day
lower, were up 1.24% at the midday break, 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 remained down 0.44% as
investors continued to consolidate recent gains. Japan's Nikkei
stock index .N225 slid 0.58%.
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 0.18%
to $68.28 per barrel, while U.S. West Texas Intermediate crude
added 0.05% to $61.75, 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, after posting its best week
in more than four months on Friday amid thin trading volumes, in
a sign that some investors continue to see risks to global
growth and U.S.-China trade.
The precious metal on Monday rose 0.33% to $1,515.40 per
ounce on the spot market. XAU= GOL/
In the currency market, the dollar was 0.30% lower against
the yen at 109.08 JPY= and the euro EUR= was up 0.27% on the
day at $1.1194.
The dollar index .DXY , which tracks the greenback against
a basket of six major currencies, was down 0.2% to 96.736.
The yield on benchmark 10-year Treasury notes US10YT=RR
was at 1.8752% compared with its U.S. close of 1.873% on Friday,
while the two-year yield US2YT=RR edged down to 1.5832%
compared with a U.S. close of 1.589%.