Asian shares jumped today, buoyed by strong US earnings and increasing global recovery hopes after China's economy grew faster than forecast in the second quarter.
But the New Zealand dollar fell after rating agency Fitch revised the outlook on New Zealand's AA-plus long-term credit rating to negative, sending the kiwi down against both the dollar and the yen..
Tokyo shares hit a one-week high before paring gains, and shares elsewhere in Asia-Pacific powered to their highest in a month. The yen rose broadly as traders took profits in other currencies and oil steadied above $61 a barrel.
European shares were expected to open mixed as investors awaited US and European earnings.
Markets were keeping a wary eye on the fate of CIT Group, a US lender to thousands of small and mid-sized businesses, after bailout talks with the government ended, a move that could ultimately drive it to bankruptcy.
Coupled with CIT's woes and Standard & Poor's downgrade of California's long-term rating and underlying rating on the state's economic recovery bonds, Fitch's decision may put the spotlight back on credit risks, he added.
But broader markets were buoyed by China's second quarter gross domestic product rising 7.9 per cent against the previous year, beating expectations for a 7.5 per cent rise, while the world's third-largest economy grew 7.1 per cent in the first half against a year earlier.
The news came on the back of a surge in US stocks on Wednesday after the release of data suggesting the recession is abating and results from bellwether Intel beat expectations.
Asian shares across the region rose 1.3 per cent to their highest since mid-June, though they were off earlier highs.
Japan's benchmark Nikkei underperformed with a rise of 0.8 percent to 9,344.16 as caution about US earnings pared earlier gains.
Mazda rose 6.2 per cent after two sources familiar with the matter said it was in talks with Toyota over Toyota supplying its smaller rival with core components for hybrid vehicles. Toyota gained 0.9 per cent.
Australian shares rose nearly 1.8 per cent and briefly touched a one-month high as miners rose on firmer base metals prices.
Fitch affirmed New Zealand's sovereign AA-plus long-term foreign currency rating and the long-term local currency rating at AAA, but revised the outlook down from stable, implying a 50:50 chance of a downgrade in the next 12-24 months.
The NZ dollar slid 1.3 per cent to $0.6403 and dropped 1.9 per cent to 60.14 yen.
The timing of the move took some by surprise given that Standard & Poor's had raised its outlook to stable from negative following the government budget on May 28th. But others took it in stride.
The yen rose, with the euro slipping 0.5 per cent to 132.21 yen and the Australian dollar falling 1 per cent to 75.01 yen. The dollar fell 0.3 per cent to 93.87 yen.
Yields on US 10-year Treasury notes stood at 3.567 per cent, down nearly four basis points from US trade but up from a two-month low of 3.26 per cent hit on Monday.
Reuters