Asian shares rise on China data, Japan bank plan

Asian shares rise on China data, Japan bank plan

Hong Kong: Asian stocks rose Tuesday on relief that Chinese inflation data met forecasts, while Tokyo was also boosted by a central bank plan to extend a credit line to help the post-quake Japanese economy.

Beijing said consumer prices rose 5.5% year-on-year in May, their fastest pace in almost three years, despite leaders’ efforts to calm inflation with a series of interest rate hikes and other monetary tightening.

In the afternoon Shanghai was 1.20% higher and Hong Kong rebounded from earlier lows to sit 0.39% stronger.

Tokyo jumped 1.05%, or 99.58 points, to 9,547.79 and Seoul gained 1.37%, or 28.09 points, to 2,076.83. Sydney climbed 0.50%, or 22.9 points, to 4,585.0.

Taipei rose 1.33%, or 116.26 points, to 8,829.21.

Regional markets were all lifted by the China results as many nations rely heavily on the world’s second-biggest economy to help drive their own growth.

The China inflation figure, which followed April’s rise of 5.3%, is the highest since July 2008 — when it hit 6.3% — and will add pressure on the central bank to announce a fifth rate hike since October or further tighten banks’ lending abilities.

Beijing’s target for the whole year is 4.0%.

Other data suggest a slowdown in China, with manufacturing easing, new loans falling and auto sales also lower — all adding to a fear among some observers that the country is heading for a hard landing.

However, most analysts said that was unlikely as other data Tuesday showed fixed asset investment for January-May rising 25.8% on-year, up from 25.4% in the first four months of the year.

Bank of America-Merrill Lynch economist Lu Ting said “a hard landing is a low-probability event".

The gains in Hong Kong and Shanghai came after shares were heavily sold in the run-up to the Chinese inflation release — Hong Kong had fallen for seven straight sessions until a small rise on Monday.

“The data came in line with expectations after the market had been plagued by expectations of high inflation over the past few sessions," Shenyin Wanguo Securities analyst Qian Qimin told Dow Jones Newswires.

However, Qian added: “I would see today’s rise as a technical rebound after recent losses, and expectations for further monetary tightening steps amid high inflation could curb the upside room."

Tokyo received a boost from the Bank of Japan’s plan to extend a ¥3 trillion ($37.4 billion) lending facility to encourage banks to channel funds into sectors such as renewable energy and medicine.

It will offer a new credit line of up to ¥500 billion to make it easier for smaller firms to access cash from banks without using traditional real estate collateral.

TEPCO jumped 25.12% after Japan’s cabinet agreed a bill to help the embattled utility compensate people affected by the crisis at the Fukushima Daiichi atomic plant, which was crippled by a 11 March quake and tsunami.

The euro held up despite Standard & Poor’s slashing its credit rating for Greece by three notches to “CCC", saying there was a significantly higher probability of a default in the struggling eurozone member.

The agency said: “The downgrade reflects our view that there is a significantly higher likelihood of one or more defaults, as defined by our criteria relating to full and timely payment."

In Tokyo afternoon trade, the single currency fetched $1.4429, from $1.4413 in New York late Monday, while also rising to 115.92 yen from ¥115.54.

The dollar was at ¥80.29 compared with ¥80.21.

Oil was mixed. New York’s main contract, light sweet crude for July delivery, lost 10 cents to $97.20 a barrel, but London’s Brent North Sea crude for July rose 27 cents to $119.37 in the Asian afternoon.

Gold opened at $1,517.00-$1,518.00 an ounce in Hong Kong, down from Monday’s close of $1,530.00-$1,531.00.