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Asian stocks creep ahead, tech sector a drag

A man looks at an electronic board displaying Japan's Nikkei average (top C) and various countries' stock indices, as passers-by walk past outside a brokerage in Tokyo April 16, 2014. REUTERS/Toru Hanai

By Wayne Cole SYDNEY (Reuters) - Asian share markets crept higher on Thursday as dovish comments from the head of the U.S. Federal Reserve lifted Wall Street while weighing on the dollar, with trade light heading into the Easter holidays. Disappointing results from Google and IBM had also knocked their shares lower after the bell and put a crimp on technology stocks in the region. The tech and telecoms sectors in Japan's Nikkei duly lost ground, leaving it to end flat for the session following a 3 percent jump the previous day. Other markets made modest gains with shares in Australia up 0.5 percent and MSCI's broadest index of Asia-Pacific shares outside Japan adding 0.33 percent. Early signs were that Europe would also start cautiously with the FTSE and DAX seen barely changed by financial spreadbetters. Wall Street had ended Wednesday with more vigour. Both the Dow and S&P 500 gained about 1 percent, while the Nasdaq bounced by 1.29 percent. Yet there was negative news to come after the bell. Google Inc lost around 4 percent after hours as first-quarter revenue fell short of Wall Street targets and margins narrowed as the price of its ads continued to decline. IBM Corp suffered after reporting its lowest quarterly revenue in five years as it struggles with falling demand for storage and server products. Shares of the world's largest technology services company fell about 4 percent to $188.20 in after-hours trade. Not helping was the simmering tension in Ukraine where the interior minister said on Thursday that three pro-Russian separatists were killed in shooting that broke out overnight in the town of Mariupol on the Sea of Azov. LOW INFLATION MEANS LOW RATES Fed Chair Janet Yellen on Wednesday said it might take two years to return to full employment and there was more risk of inflation staying too low than going too high. Achieving the Fed's economic goals "will likely require low real interest rates for some time," a policy view she said was shared broadly across many advanced economies. "We read this as a not-so-subtle signal that, although the committee has gradually begun to remove its outright commitment to low rates and balance sheet expansion, the Fed is in no hurry to accelerate the trend or initiate a rate hike cycle," said Michael Gapen, and economist at Barclays. The prospect of low rates for longer helped pull down long-term borrowing costs. Yields on Treasury 30-year bonds dipped to 3.44 percent and near lows not seen since July last year. But that in turn weighed on the dollar which eased back to 101.99 yen from an early high at 102.26. The euro was a whisker firmer at $1.3840 but well within recent ranges. Bonds in Europe had extended their spectacular rally amid speculation that persistently low inflation would force the European Central Bank to launch further stimulus. Yields on Spanish 10-year debt sank to their lowest in over eight years at 3.06 percent, while Italian 10-year yields hit an all-time trough at 3.11 percent. Economic news out of the United States was mixed with industrial production beating forecasts but housing starts disappointing. Still, investors were cheered by the Fed's Beige Book of anecdotal information on business activity which showed activity picked up in recent weeks as weather-related drag eased. Spot gold steadied at $1,301.10 an ounce having found support in the $1,290/1,293 area after a technical selloff early in the week. Brent crude for June eased 12 cents to $109.48 a barrel. U.S. crude was up 33 cents at $104.09 a barrel, shrugging off a huge build in stockpiles. (Editing by Shri Navaratnam and Eric Meijer)