REFILE-GLOBAL MARKETS-Asian shares rise as investors look past China rate hike

(Refiles to fix typo in headline, delete extraneous text)

* Asian stocks edge up, low volumes keep markets choppy

* Shanghai shares ease, reverse earlier gains

* Nikkei outperforms rest of Asia but volumes light

* Aussie dollar recoups losses

* Fundamentals, supply issues underpin commodities

By Vikram S.Subhedar

HONG KONG, Dec 27 (BestGrowthStock) – Asian shares edged up while
the Australian dollar and commodities pared early losses as
investors bet China’s latest interest rate hike would not
change the optimistic outlook for the global economy in 2011.

People’s Bank of China raised rates by 25 basis points on
Saturday, the second rate rise in just over two months, as
part of a series of measures designed to combat inflation
which hit a 28-month high of 5.1 percent in November.
[ID:nTOE6BO014]

“Our economists had expected a rate rise before the end of
the year, but releasing the news on Christmas Day itself came
as a little surprise to the market,” said Chen Xin Yi,
associate vice president at Barclays Capital in Singapore.

“Nevertheless, we believe that the well-calibrated timing
reflects consideration for minimizing unwanted financial
market volatility and reducing potential capital movement to
the extent possible.”

The MSCI index of Asian stocks outside Japan
rose 0.2 percent. Major markets such as Hong
Kong and Australia remained closed.

“The impact of today’s rate move on the real economy’s
growth momentum is likely to be minimal.” said Qian Wang,
chief China economist at JP Morgan.

China’s key stock index pared earlier gains and
yuan forwards were modestly higher. The Shanghai Composite was
down 0.3 percent, with weak small and mid-cap shares
offsetting mild gains in banking and insurance
shares.[ID:nBJD000151]

Japan’s Nikkei closed up 0.75 percent, extending
its recent outperformance versus other Asian markets. The
Nikkei is up over 10 percent this quarter versus a 5.4 percent
rise for the MSCI Asia ex-Japan index.

Still, Japanese investors are entering 2011 in a bullish
mood, raising equity holdings to a 10-month high, increasing
exposure to high-yield credit and cutting back on government
debt, Reuters polls showed last week. [ID:nLDE6BL0B2]

S&P futures (SPc1: ) were a shade lower, down 0.2 percent.

FUNDAMENTALS SUPPORT COMMODITIES

Commodity markets pared early losses in response to an
interest rate rise by PBOC, focusing instead on positive
fundamentals and threats to supply.

U.S. wheat (Wc1: ) had dropped by more than 2 percent at the
open before recovering to $7.81-3/4 a bushel, down 0.2
percent, while spot gold was trading flat after
dropping to a one-week low of $1,371.1 earlier.

Crude oil futures (CLc1: ) reversed early falls, rising 0.3
percent to a two-month high.

The Australian dollar was flat after slipping in
early trading on expectations that more tightening by China
could prompt investors to sell the Aussie after the year-end
break.
(Additional reporting by Nick Trevethan in SINGAPORE and
Anotoni Slodkowski in TOKYO; editing by Kazunori Takada)

* For Reuters Global Investing Blog, click on

http://blogs.reuters.com/globalinvesting

* For the MacroScope Blog, click on

http://blogs.reuters.com/macroscope

* For Hedge Fund Blog, click on

http://blogs.reuters.com/hedgehub

REFILE-GLOBAL MARKETS-Asian shares rise as investors look past China rate hike