Asian shares rise on firm China, US factory data

Friday, 23 November 2012 00:01 -     - {{hitsCtrl.values.hits}}

Reuters: Asian shares rose on Thursday as a survey showed China’s manufacturing sector expanded for the first time in 13 months in November, adding to optimism after firm U.S. factory data that the global growth slowdown may have turned a corner.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended early gains to rise 0.8 percent to a one-week high.

Regional equities markets had already been buoyed by recovering risk appetite on easing tension in the Middle East and hopes that a Greece bailout will be agreed next week.

Resources-sensitive Australian shares .AXJO surged 1.3 percent to a one-week high as miners climbed. London copper rose 0.5 percent to $7,732.75 a tonne while spot gold inched up 0.2 percent to $1,731.34 an ounce.

The China HSBC Flash Manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, indicating factory activity was picking up and pointing to a reviving economic growth after seven consecutive quarters of slowing. A sub-index measuring output rose to 51.3, also the highest since October 2011.

“The data suggests the China’s growth had hit a bottom in the third quarter and prospects are brightening for small and medium-sized firms in China,” said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory.

While the report is positive, the rise in prices of base metals, for which China is the world’s top consumer, will be contained given the high level of Chinese inventories, he said.

“But shares get a boost because they are driven by sentiment and because contained base metal prices under an improving economy will help companies boost their earnings,” Niimura said.

Japan’s Nikkei stock average .N225 jumped 1.2 percent to a 6-1/2-month high as exporters were lifted by hopes the weakening yen would boost their earnings. .T

The yen has come under pressure since the Japanese government announced a December 16 election last week.

The opposition Liberal Democratic Party, which is tipped to win, on Wednesday promised a big extra budget and a policy accord with the central bank on aggressive monetary stimulus to prevent the economy from sliding into recession.

The yen fell to a 7-1/2-month low versus the dollar of 82.59 on Thursday, while the yen also hit a 6-1/2-month low of 106.26 yen against the euro.

“Yen, I think, is being driven by anticipation of LDP led government forcing aggressive monetary easing,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

Traders said the markets may be capped as activity slows ahead of the U.S. Thanksgiving holiday weekend.

Niimura said as hedge funds close their books this month and next, any swing in prices should be seen as more related to their position adjustments than a change in real risk appetite.

European shares .FTEU3 rose for a third straight session on Wednesday as investors bet on a positive outcome to negotiations over aid to Greece after German Chancellor Angela Merkel said a deal to release emergency aid to Greece was still possible next Monday when euro ministers meet.

The expectations of a Greek deal helped the euro rebound to a two-week high against the dollar of $1.28685, after being initially sold off after international lenders to Greece failed to reach a deal to release the aid on Wednesday.

“Efforts to avert a Greek default may provide short-term relief for the euro, but the measures will only help to buy more time as Greece persistently seeks further external assistance,” said David Song, currency analyst at DailyFX, who is maintaining a bearish view on the single currency.

Overnight, U.S. stocks ended modestly higher but volume was one of the year’s lowest on the day ahead of the U.S. Thanksgiving holiday.

U.S. manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand hinting that factories could provide a boost to economic growth in the fourth quarter, while those from Europe are due out later on Thursday.

A ceasefire between Israel and Gaza’s Hamas rulers took hold on Thursday after eight days of conflict, easing concerns about supply from oil-producing Middle East.

U.S. crude rose 0.3 percent to $87.66 a barrel while Brent inched up 0.2 percent to $111.06.

A rallying stock market boosted sentiment in Asian credit markets, tightening the spreads on the iTraxx Asia ex-Japan investment-grade index by 3 basis points.