Asian stocks rise on strong economic data

By Anshuman Daga

SINGAPORE (BestGrowthStock) – Asian stocks gained for a third day on Thursday, powered by strong economic data from Australia and China, and the euro rose ahead of a key EU summit that could lay the groundwork for a rescue of debt-stricken Greece.

European Union leaders are expected to reach a political agreement at the summit to help Greece, with the financial details to be hammered out at finance ministers’ meeting in Brussels on Monday, a senior EU source told Reuters.

But any emergency aid is likely to require a big commitment from Athens on getting its economy in order, and may do little to ease investors’ long-term concerns about fiscal tensions in the euro zone and whether they will hurt the global economic recovery.

Greece’s ballooning deficit and debt have reverberated across financial markets in recent months, hitting the euro regional banking stocks and some government bonds, and prompting many investors to pull back from riskier assets worldwide.

“It seems all markets are focused on events in the euro zone and ‘will they’ or ‘won’t they’ commit bags of cash to a bailout in some manner,” said David Watt, senior currency strategist at RBC Capital.

Asian shares shrugged off euro zone jitters and sluggish U.S. markets, buoyed by data showing a surge in employment in Australia and stronger-than-expected bank lending in China in January.

The MSCI index of Asian stocks traded outside Japan advanced about 1.8 percent, with the metals and energy sector leading the way. Japan was closed for a national holiday.

The index has lost more than 6 percent so far this year after surging nearly 70 percent in 2009, far outpacing gains of just 20 percent in U.S. and European countries.

Asian corporate earnings have mostly met market estimates this year due to strong regional economic growth, with equity analysts recently upgrading estimates for metals and mining industries and the technology sector.

Hong Kong shares closed up 1.9 percent, rising for a third straight session, as sentiment improved underpinned by firmer Chinese markets on easing worries over a potential rise in benchmark deposit and lending rates.

In China, whose markets have been pressured by worries about an official clampdown on excessive credit, data showed banks lent 1.39 trillion yuan of loans in January, more than the 1.35 trillion yuan economists had forecast.

Other data showed consumer inflation moderated more than expected in the year to January, though producer price inflation accelerated.

“A big part of the risk perception that motivated the sell-down of Chinese stocks was concerns about an inflation breakout and possibly that China would have to dramatically tighten monetary policy in response,” said Michael Kurtz, head of Asian equity strategy at Macquarie in Shanghai.

“This number goes a long way in reducing those worries,” Kurtz said, referring to the consumer inflation data.

Beijing’s moves to staunch excessive credit and keep the economy from overheating have pushed Shanghai and Hong Kong indexes down more than 10 percent from November and weighed on stocks in the rest of Asia and globally.

Shanghai stocks edged up 0.1 percent.

Seoul shares rose 1.8 percent, posting their biggest percentage gain in over 10 weeks, led by financials and autos and helped by the Bank of Korea governor’s comments pointing to a steady rate stance.

South Korea’s central bank warned of considerable uncertainties in the economic outlook, citing Europe’s debt woes, prompting economists to push back expectations for a rate rise to the second half of the year.

Australian shares rose 0.9 percent to their highest close in one week and the Australian dollar jumped after data showed employment surged past all forecasts for a fifth straight month in January.

The jobless rate also dove to an 11-month low, reigniting talk interest rates would have to go up again as early as March.

Shares in India and Taiwan rose more than a percent. Singapore stocks inched up 0.7 percent.

Gold gained after the euro bounced against the U.S. dollar ahead of the EU summit that may decide to help debt-laden Greece avoid default and eventually restore confidence in the single currency.

Oil climbed toward $75 a barrel, buoyed by an upbeat forecast of oil demand growth and by hopes of a rescue plan for the beleaguered Greek economy.

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(Additional reporting by Anirban Nag in SYDNEY; Editing by Deepak Kannan)

Asian stocks rise on strong economic data