Asian markets rise on first trading day of 2011

Tuesday, 4 January 2011 00:01 - - {{hitsCtrl.values.hits}}

Asian stocks were broadly higher Monday on the first trading day of 2011 while investors digested Chinese manufacturing data pointing to a slight cooling in the world’s second biggest economy.

The dollar picked up against major currencies after suffering a three-day sell-off last week and Singapore was on a high after news that the economy had grown at its strongest rate ever.

Hong Kong rose 1.25 percent in early trade, Seoul rose 0.65 percent and Singapore added 1.15 percent.

However, Sydney slipped 0.95 percent as Australia was hit by torrential floods that have left two people dead, with authorities warning of more devastation to come.

Tokyo, Shanghai, Wellington and Bangkok are closed for public holidays.

China on Saturday said manufacturing growth eased last month, suggesting attempts to cool the soaring economy could be working.

The country’s Purchasing Managers Index fell to 53.9 from 55.2 in November, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement Saturday.

A figure above 50 indicates expansion while a figure below 50 indicates contraction.

The figures confirm a slowdown highlighted by a separate PMI from HSBC on Thursday, which fell to 54.4 in December from November’s 55.3.

China has been struggling to calm the rapid growth of its economy, which posted annualised growth of 9.6 percent in the third quarter of 2010, slowing from 11.9 percent in the first three months.

The red hot pace of expansion has sent inflation to a two-year high 5.1 percent and led Beijing to raise interest rates on December 25 for the second time in two months.

Singapore was given a boost after the government said late Friday that the economy grew at a record 14.7 percent in 2010 as the export-dependent economy bounced back from the global downturn.

The performance beat its previous best of 13.8 percent in 1970 and made the city-state Asia’s best performing economy of the year.

The dollar strengthened against the euro and yen as traders backed the greenback after three days of selling.

A euro bought 1.3289 US dollars, down from 1.3381 in New York on Friday and the US unit was at 81.35 yen from 81.28.

The European currency was changing hands at 108.11 yen from 108.32.

“There was a very strong three-day rally in the euro and it’s quite normal to have short-covering,” said Philip Wee, senior currency economist for DBS Group Research in Singapore.

The euro gained ground against the greenback in the last three days of 2010, driven partly by investors short-selling the dollar for the European currency. Traders were also eyeing US Federal Reserve chairman Ben Bernanke’s testimony on the US economic outlook to the Senate Budget Committee on Friday for leads, Wee told AFP.

In the oil markets, New York’s main contract, light sweet crude for delivery in February, rose nine cents to 91.47 dollars per barrel and Brent North Sea crude for February delivery was up 14 cents at 94.89 dollars.

Gold opened at 1,416.00-1,417.00 US dollars an ounce in Hong Kong, up from Friday’s close of 1,408.00-1,409.00 dollars.