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[SYDNEY] Asia's benchmark stock index rebounded from four weeks of losses as Chinese and Taiwanese shares gained while Japanese equities pared a steep loss.
The MSCI Asia Pacific Index rose 0.4 per cent to 126.10 as of 4.16pm in Tokyo, swinging from a drop of as much as 0.6 per cent. The biggest gains were seen in Taiwan, where the Taiex index rallied 2.6 per cent, the most since September, on optimism Apple Inc orders for the iPhone 7 will be higher than estimated.
Hong Kong's Hang Seng Index and the Shanghai Composite Index both climbed on low volumes. Japan's Topix index lost 0.4 per cent at the close, after sliding as much as 1.8 per cent, as the yen gained amid clashes between the Group of Seven finance chiefs on whether to intervene in the currency market.
It's been a wild ride for investors in Asia-Pacific equities this year. The regional index began 2016 with a 14 per cent slump through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for a Federal Reserve rate increase.
It then rallied almost 20 per cent through this year's peak in April before retreating again, with the gauge dropping 19 per cent in the last four weeks.
"The market has been overly concerned about the global growth slowdown as well as the imminent Fed rate hike," said Norman Chan, chief investment officer at Oreana Private Wealth in Hong Kong. "Both are not going to happen very soon."
Taiwanese shares gained the most among Asian equity benchmarks, with Apple vendors Taiwan Semiconductor Manufacturing Co and Hon Hai Precision Industry Co among the biggest contributors to advances on the regional gauge.
The iPhone maker asked suppliers to prepare production of a new version of its smartphones, the Economic Daily News reported. Apple asked suppliers to prepare for an output of 72 million to 78 million units of the iPhone 7 series by the end of 2016, the highest target in about two years, according to the report.
China's Shanghai Composite Index added 0.6 per cent. Trading volumes in mainland China and Hong Kong were at least 20 percent below the 30-day average for this time of day. South Korea's Kospi index advanced 0.4 per cent. Singapore's Straits Times Index gained 0.3 per cent. Hong Kong's Hang Seng Index was little changed.
The Topix pared losses of as much as 1.8 per cent while the yen gained 0.4 per cent against the dollar on Monday to trade at 109.74.
Exports from Japan fell for a seventh consecutive month in April as the yen strengthened, underscoring the mounting challenges to Prime Minister Shinzo Abe's efforts to revive economic growth. Overseas shipments dropped 10 per cent while imports declined 23 per cent. Toyota Motor Corp fell 1 per cent and Hino Motors dropped 1.1 per cent.
The biggest source of tension at the G-7 meeting over the weekend, held in Sendai in northern Japan, was the strong yen, with officials expressing concern about the impact on exports. Finance Minister Taro Aso signaled a willingness to take action against "disorderly" moves. US Treasury Secretary Jack Lew was unsympathetic, saying there had to be "a pretty high bar" for intervention.
"It's possible that the G-7 meeting made investors conclude Japan and the US have failed to reach an agreement," said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management Co in Tokyo. "The yen is strengthening, and Japan's trade balance was bigger than expected."
Australia's S&P/ASX 200 Index lost 0.6 per cent and New Zealand's S&P/NZX 50 Index closed little changed. BHP Billiton, the world's largest mining company, which gets more than one quarter of sales from its petroleum unit, sank 2.6 per cent. Oil futures for July slid 1.5 per cent to trade at US$47.70 a barrel.
The Asia Pacific benchmark equities gauge fell last week as minutes of the Fed's April meeting indicated most policy makers thought a rate increase in June would be appropriate should the US economy continue to improve. Stronger-than-expected American economic data also bolstered the case for tighter policy and odds of an increase in US borrowing costs next month are now at 28 per cent, up from 4 per cent a week ago.
"Expect short-term share market volatility to remain high," said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors, which oversees about US$120 billion.
"Fed worries are coming back into focus and this could mean more uncertainty around the US dollar, the yuan and commodity prices. However, beyond near-term volatility, we still see shares trending higher."
Fed Bank of Boston President Eric Rosengren, who votes on policy changes, told the Financial Times at the weekend that he's ready to back a rate increase. St Louis Fed President James Bullard, who also votes this year, speaks in Beijing on Monday, while John Williams of the San Francisco Fed, who doesn't vote until 2018, is due to give an address in New York. Philadelphia Fed President Patrick Harker delivers two speeches this week, while Fed Chair Janet Yellen will speak at Harvard University on Friday.
E-mini futures on the S&P 500 lost 0.3 per cent after the underlying US equities gauge advanced 0.6 per cent Friday. The measure rebounded from a seven-week low, led by a rally in technology shares.
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