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 The world's second largest economy expanded at a 7.5 percent annual
pace in the second quarter, the statistics bureau said, just beating
the 7.4 percent median forecast in a Reuters poll.
The numbers, which also helped push crude oil and some industrial
metals higher, confirmed the economy had stabilized after a shaky
start to the year though analysts said the pick-up was largely
driven by government stimulus.
The pan-European FTSEurofirst 300 equity index was up 0.6 percent,
buoyed by mining stocks which strengthened in anticipation of demand
from China. [.EU]
"It confirms the trend we've seen from improving PMI data, and is in
line with the idea of a pick-up in the global economy. That's
positive for the mining sector," said James Butterfill, global
equity strategist at Coutts.
The China data helped push Shanghai zinc and London aluminum close
to their highest in more than a year.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped
0.7 percent, however, and Tokyo's Nikkei share average ended 0.1
percent lower as investors took profit on Tuesday's gains.
"The GDP figure is in line with our expectation, but the underlying
momentum and recovery is still at a fragile state, especially given
the property market correction," said Chang Jian, a Hong Kong-based
analyst at Barclays.
The Australian dollar, often seen as a proxy for Chinese growth, was
down 0.2 percent against the U.S. dollar at $0.9345.
The biggest mover in currency markets was the New Zealand dollar,
which dropped 0.8 percent to a low of $0.8690 after benign inflation
data that could reduce pressure on the central bank to tighten
policy.
The U.S. dollar index, which values the greenback against a basket
of currencies, was up 0.05 percent, clinging onto modest gains after
Federal Reserve Chair Janet Yellen said on Tuesday that interest
rates could rise sooner than expected if employment data improved.
The dollar was up 0.1 percent against the euro at $1.3558 and flat
at 101.68 yen.
Sterling, which surged towards a six-year high against the dollar on
Tuesday as a leap in inflation fueled expectations the Bank of
England could raise interest rates later this year, remained in
focus before jobs and wage data due at 0830 GMT (4.30 a.m. EDT). It
stood at $1.7138, having hit $1.7192 on Tuesday.
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"With unemployment falling, business surveys printing at robust
levels and now inflation close to the BoE's target level, any sign
of wage growth will effectively put the icing on the cake as far as
markets are concerned," said Peter Kinsella, currency strategist at
Commerzbank.
Brent crude climbed above $106 a barrel after the Chinese data. It
had hit a three-month low of $104.39 on Tuesday.
"Chinese economic data could be the catalyst to push Brent back up
towards $108 a barrel," said Ben Le Brun, a market analyst at
Sydney-based trader OptionsXpress.
PORTUGAL BONDS
Portugal remained the main focus among euro zone government bond
markets. Concern over the exposure of Banco Espirito Santo, the
country's largest listed lender, to the troubled companies of its
founding family has been a main driver of trading in recent days.
The yields on Portugal's benchmark 10-year bond fell more than 20
basis points to 3.74 percent. Lisbon shares rose more than 1
percent, with Banco Espirito Santo shares up 6.84 percent.
Gold steadied after two days of losses but held near a four-week low
thanks to the stronger dollar and worries the Fed could raise
interest rates faster than expected. Spot gold was last at
$1,298.10.
(Additional reporting by Wayne Cole in Sydney, Alistair Smout in
Edinburgh, Anirban Nag and Marius Zaharia in London; Editing by
Catherine Evans)
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