Asian shares rise on outlook for global economy

Wednesday, 5 January 2011 00:01 -     - {{hitsCtrl.values.hits}}

HONG KONG, (AFP) -Asian markets extended their New Year gains on Tuesday as dealers welcomed further data pointing to a recovery in the United States as well as strong manufacturing data around the world.

With all major Asian markets open for the first time in 2011, Tokyo added 1.65 percent, or 169.18 points, to close at 10,398.10 and Hong Kong rose 0.51 percent by the break.

Seoul, which jumped to a record high on Monday, extended its gains 0.73 percent, or 15.06 points, to finish at 2,085.14.

Shanghai was 1.32 percent higher in the afternoon while Singapore gained 0.61 percent.

However, Sydney edged down 2.7 points to 4,742.5 as insurance firms weakened due to deadly floods that have battered Australia.

The markets were given a strong lead from Wall Street on Monday, where the Dow jumped 0.81 percent to a two-year high following figures showing US manufacturing had picked up for the 17th straight month in December.

The Institute for Supply Management index rose to 57.0 from 56.6 in November, slightly below most analysts’ expectations. A figure above 50 percent denotes growth and a figure below indicates contraction.

Also on Monday the eurozone’s Markit indicator of industrial and services activity showed a rebound to 57.1 in December against 55.3 in November and 54.6 in October.

That followed similar advances in Taiwan and South Korea, while two purchasing managers’ indexes in China said last week that growth had continued last month, albeit more slowly.

The US figures boosted the dollar, which climbed to 82.10 yen in Tokyo morning trade from 81.70 yen in New York late Monday.

With the improved sentiment, risk appetite increased, sending the euro up to 109.65 yen from 109.07 yen. The single currency was flat at 1.3356.

“An overnight rise in New York stocks and strong US economic data supported the dollar,” said Nobuaki Tani, a dealer at Resona Bank.

“Dollar-positive sentiment on expectations of US economic recovery is likely to persist as the market awaits upcoming data such as a US employment report later this week,” he told AFP.

Dealers on Sydney’s ASX sold off insurers amid concerns over the impact of the floods that have hit parts of Queensland and are expected to continue, with more rain forecast.

The extent of the floods’ damage, described by Queensland Treasurer Andrew Fraser as “of biblical proportions”, and the cost to insurers is unlikely to be known until the floodwaters start to recede.

Insurance Australia Group was down 1.55 percent and QBE Insurance Group fell 2.09 percent.

Oil prices were mixed in Asian afternoon trade thanks to the strong US economic data.

New York’s main contract, light sweet crude for February delivery, dipped eight cents to 91.47 dollars per barrel. Brent North Sea crude for February was up three cents at 94.87 dollars.

Gold opened at 1,414.00-1,415.00 US dollars an ounce in Hong Kong, down from Monday’s close of 1,418.50-1,419.50.

In other markets: Taipei fell 0.31 percent, or 28.11 points, to 8,997.19.

Nan Ya Plastics edged down 0.28 percent at 72.4 Taiwan dollars while Taiwan Cement closed 0.75 percent lower at 33.5. Manila edged down 3.52 points to 4,218.73.

Manila Electric gained 0.8 percent to 247 pesos, Semirara Mining added 3.1 percent to 189.50 and First Philippine Holdings (FPH.PH) ended 1.5 percent higher at 68. But Metropolitan Bank slipped 0.1 percent to 72.95. Wellington was closed for a public holiday.