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OPTIMISM RETURNING

Shares at 3-month high after China, Australia data

Singapore, August 9, 2012

 

Asian shares rose to a three-month high on Thursday after a drop in Chinese consumer inflation left room for more policy easing to support growth, while Australia's improving labour market kept the country in better shape without stimulus for now.
 
The new data added to growing but still guarded investor optimism that European policymakers will take decisive action to tackle the euro zone debt crisis, helping Asian equities rally for the fourth-straight day.    
 
European stocks were likely to follow Asia higher, while a 0.3 percent gain in US stock futures signalled a solid
Wall Street start. Financial spreadbetters called the main indexes in London, Paris and Frankfurt 
to open up as much as 0.4 percent.   
 
MSCI's broadest index of Asia-Pacific shares outside Japan jumped 1 percent, led by a 1.8 percent advance
in Korean shares, while Australian shares rose 0.3 percent, supported by data showing employment rose and the
jobless rate ticked down in July. 
 
"Investors are continuing to shed safe havens while adding risk, with foreign investors unrelenting in their appetite for local stocks," said Cho Sung-joon, an analyst at NH Investment &
 Securities, speaking of Korean shares.
    
Japan's Nikkei stock average hit the psychologically key 9,000 mark for the first time in five weeks before easing
slightly, but was still up 1.1 percent by early afternoon. 
 
China's annual consumer inflation fell to a 30-month low of 1.8 percent in July while producer prices dropped 2.9 percent year-on-year in July. 
    
"This number gives more room for policy easing. It is now pretty clear that CPI will likely be below the official 4
percent target for the year, so the policy focus for the government can stay clearly on growth," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.
    
Chinese industrial output and retail sales reports are due at 0530 GMT.       
 
South Korea's central bank kept interest rates steady on Thursday as widely expected to assess the impact of last month's surprise cut, but investors continue to price in another reduction soon to shore up Asia's fourth-largest economy.
 
The Bank of Japan also stood pat, as expected, ending its two-day policy meeting with no announcement of new monetary easing steps. - Reuters



Tags: inflation | China | Australia | Shares |

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