Asia shares up on stimulus hopes

Mon, Sep 3, 2012, 01:00

Asian shares rose today after US Federal Reserve chairman Ben Bernanke kept the door open for further stimulus if needed, while weak economic indicators across the region raised hopes for additional growth-bolstering steps in Asia as well.

Mr Bernanke stopped short of clearly signalling an imminent move last week, prompting investors to turn to reports from China to Australia that highlighted how the euro zone's debt crisis has eroded growth and threatened further slowdowns.

European equities were expected to drop, with financial spreadbetters calling London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to open down as much as 0.2 per cent. US stock futures were down 0.1 per cent, but main US markets will be closed today for the Labor Day holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 per cent, reversing from an earlier 0.5 per cent fall to a fresh four-week low.

Australian shares turned positive to trade up 0.2 per cent after an unexpected fall in July domestic retail sales strengthened the case for a rate cut later this year.

Japan's Nikkei stock average rose 0.5 per cent, recouping earlier losses which took it to a four-week low.

The HSBC China Purchasing Managers' Index for smaller and privately-owned producers fell to a seasonally adjusted 47.6, its lowest level since March 2009.

The HSBC report followed the official factory PMI on Saturday which dropped below 50 for the first time since November 2011, the latest signal that the world's second-biggest economy is struggling against global headwinds, which may pave the way for more government stimulus measures.

The Australian dollar, highly sensitive to China, Australia's single largest export market, fell to its lowest since July 25 of $1.0240 before rebounding to $1.0268.

"Obviously, the Aussie is taking the brunt of China's dismal economic data, especially as the currency had consistently outperformed other markets over the past few months despite volatile risk sentiment. It was due for a correction." said Daisuke Karakama, market economist for Mizuho Corporate Bank.

Other data today showed Taiwan's PMI fell in August for its steepest manufacturing contraction this year, hit by a drop in new export orders. Sluggish sales to China and Europe also hit South Korean exports for the first 20 days of August.

Reuters