Asian stocks mixed as China reports inflation rise

[February 15, 2011]  BANGKOK (AP) -- Asian stock markets were mixed Tuesday as investors digested news that China's inflation rate remained elevated in January following a jump in food prices.

Oil prices rose above $85 a barrel as violent street protests in Iran raised fears crude supplies could be disrupted from one of world's biggest producers. In currencies, the dollar was steady against the yen but lower against the euro.

Tokyo's benchmark Nikkei 225 stock average edged up 0.2 percent to 10,748.16, buoyed by a statement from the Bank of Japan that the country's sluggish economy appeared to be shaking off some inertia as production and exports improve.

Exports have been a key driver of Japan's economy, which has relied on demand from the rest of the world to offset lackluster conditions at home. Major exporters that rose included Toyota Motor Corp., up 2.1 percent; Hitachi Ltd., up 1.6 percent; and Panasonic Corp., up 0.4 percent.

Hong Kong's Hang Seng index was down 0.5 percent at 23,016.47 while South Korea's Kospi index fell 0.1 percent to 2,012.26. Australia's S&P/ASX slipped 0.1 percent to 4,930.30. Markets in Singapore, India and the Philippines were also lower.

But the Shanghai Composite index added 0.6 percent to 2,917.53 and benchmarks in Taiwan, Malaysia, Thailand and New Zealand also rose.

China on Tuesday said inflation rose to 4.9 percent in January, driven by a 10.3 percent increase in food costs. The January figure was an increase from December's 4.6 percent rate and close to November's 28-month high of 5.1 percent.

Beijing has hiked interest rates three times since October to cool rapid economic growth and inflation pressures, causing worry among investors who fear such measures could slow Chinese growth -- affecting the United States, Australia and other economies by cutting demand for their exports. But those worries were eased to some degree by January's inflation not being as high as feared.

"The increase was not as big as investors anticipated. This may show some of the measures implemented so far are already working, such as monetary tightening," said Dariusz Kowalczyk of Credit Agricole in Hong Kong.

"Now markets are speculating that further tightening will not be as aggressive as once feared."

"This means China will continue to demand exports from the rest of Asia," Kowalczyk said.

Australian iron ore miner Fortescue Metals Group Ltd., which sells heavily to China, rose 0.2 percent.

In New York on Monday the Dow Jones industrial average slipped 5.07 points, or less than 0.1 percent, to 12,268.19. Investors are awaiting retail sales data from the Commerce Department later Tuesday for some indication of whether the U.S. economic recovery is picking up pace.

In currencies, the dollar was little changed at 83.40 yen while the euro climbed to $1.3512 from $1.3484.

Benchmark crude oil for March delivery was up 36 cents at $85.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 77 cents to settle at $84.81 a barrel on Monday.

[Associated Press; By PAMELA SAMPSON]

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