Asia: Stocks take breather after last week's surge

[HONG KONG] Asian markets were mixed on Monday as traders took a breather after last week's rally, while Hong Kong and Shanghai were barely moved after a weak Chinese manufacturing report.

Dealers were given a healthy lead from Wall Street, where the Dow and S&P 500 reached new record highs after Japan's central bank said it would ramp up its own stimulus programme to kickstart growth.

The dollar held on to Friday's gains against the yen, sitting at seven-year highs, as Friday's news came days after the Federal Reserve ended its own stimulus, highlighting the contrast between the US and Japanese economies.

Hong Kong was flat and Shanghai added 0.39 per cent, while Sydney eased 0.30 per cent and Seoul dipped 0.60 per cent. Tokyo was closed for a public holiday.

Global markets and the dollar surged on Friday after the BoJ said it would widen its asset-purchasing scheme to boost lending and try to avert a recession.

After a jump in Asian shares, including a near five per cent rise in Tokyo, Wall Street powered ahead.

The Dow leapt 1.13 per cent and the S&P 500 added 1.17 per cent - both hitting all-time highs - while the Nasdaq gained 1.41 per cent.

However, dealers took a breather for the first day of November trade, with profit-takers moving in.

Shanghai and Hong Kong edged up after China released at the weekend an index of manufacturing activity that showed growth slowed in October, the latest data indicating the world's second-largest economy slowing down.

The official purchasing managers index (PMI) came in at 50.8 last month, the National Bureau of Statistics said, lower than the 51.1 in September. Readings above 50 indicate growth, while anything below points to contraction.

PMI tracks activity in China's factories and workshops and is a closely-watched indicator of the health of the economy.

On Monday a separate report by HSBC came in a 50.4, the strongest result since July.

"Overall, the manufacturing sector continued to stabilise in October, however the sequential momentum likely weakened," says HSBC. "The economy still shows clear signs of insufficient effective demand." The figures have raised hopes that Beijing will introduce a new set of economy-boosting measures, with some analysts suggesting officials will cut the amount of cash banks must keep in reserve, in order to boosting lending.

On currency markets the dollar bought 112.74 yen - its highest since December 2007 - against 112.25 yen Friday in New York.

The euro was at US$1.2473 and 140.60 yen compared with US$1.2525 and 140.71 yen.

Oil prices moved higher. US benchmark West Texas Intermediate for December delivery rose one cent to US$80.55 while Brent crude for December was up 15 cents to US$86.01.

The price of gold fell to US$1,167.47 an ounce from US$1,173.87 late Friday.

AFP