World markets inch higher as China data sifted

[August 11, 2009]  HONG KONG (AP) -- Major Asian markets inched higher Tuesday amid signs China's stimulus measures were helping shield its economy from the global slump and as governments issued cautious outlooks about the recovery. European markets also rose.

The tentative gains came as investors sifted through a rash of data about China's economy that provided signs Beijing's multibillion-dollar effort to restore stable growth was making headway, though weak fundamentals persisted.

While still pointing to improvements, some of the data, including those covering industrial production, fixed investment and lending, were somewhat weaker than many investors anticipated. What's more, imports and exports were still down sharply from a year earlier amid continuing subdued demand from Western countries.

Investors have been counting on China's homegrown growth, driven by government spending and a flood of new bank lending, to bolster other economies still emerging from the downturn.

However, Peter Lai, investment manager at DBS Vickers in Hong Kong, said he was expecting a correction in the markets because expectations China's growth can aid the region in a significant way, among the reasons for Asia's gains this year, may be overdone.

"The upside room is quite limited right now," he said. "The global economy may have reached a bottom, but the revival will take some time, there are just too many uncertainties."

Sherman Chan, economist with Moody's Economy.com in Australia, described the Chinese data as "modest," representing a break from the government's frenetic efforts to hit the country's economic growth target this year.

"They're catching their breath after a strong second quarter," she said. "The government is so keen to achieve 8 percent growth it means they'll have to step up efforts in the second half."

Early in Europe, benchmarks in Britain, France and Germany were higher by around 0.5 percent.

After trading in a narrow range in the morning, most Asian markets headed higher.

Hong Kong's Hang Seng closed up 144.69 points, or 0.7 percent, at 21,074.21 and Shanghai's benchmark added 0.5 percent to 3,264.73

Japan's Nikkei 225 stock average rose 61.20, or 0.6 percent, to 10,585.46 as the Bank of Japan said there were signs the downturn was bottoming out but warned about growing joblessness.

South Korea's central bank was similarly cautious, saying the road to stronger growth was uncertain because recoveries in other major economies could be delayed. The country's benchmark Kospi added 0.2 percent to 1,579.21.

In Singapore, the government revised slightly higher its economic growth in the second quarter but warned U.S. consumption must pick up to sustain a recovery. The city-state's main stock index climbed 2.1 percent after being closed for a national holiday Monday.

Elsewhere, Australia's benchmark rose 0.7 percent, helped by a survey showing confidence hit its highest level in almost two years in July. Indexes in Taiwan and India also gained.

Wall Street posted moderate losses overnight as investors took some profits without any major corporate or economic news.

The Dow Jones industrial average fell 32.12, or 0.3 percent, to 9,337.95. The Standard & Poor's 500 index fell 3.38, or 0.3 percent, to 1,007.10, while the Nasdaq composite index fell 8.01, or 0.4 percent, to 1,992.24.

Wall Street futures rose modestly with Dow futures up 21 points, or 0.2 percent, at 9,341 and S&P futures ahead by 4.25, or 0.3 percent, at 1,616.75.

Oil prices lingered below $71 a barrel, with benchmark crude for September delivery up 37 cents at $70.97. On Monday, the contract fell 33 cents.

The dollar fell to 96.85 yen from 97.09 yen, and the euro traded higher at $1.4168 compared to $1.4144.

[Associated Press; By JEREMIAH MARQUEZ]

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