Asia: Shanghai up despite China data, euro rises

[HONG KONG] Shanghai shares rose for a 10th straight session Tuesday despite weak Chinese manufacturing data, while the euro was up on hopes of a breakthrough in Greece's bailout talks with Germany.

Comments from the US Federal Reserve's vice chairman suggesting interest rates would rise more slowly than expected put further downward pressure on the dollar.

Shanghai climbed 0.10 per cent, or 3.68 points, to 3,691.41, ending at a near seven-year high after reversing an early sell-off on hopes the weak data will spur fresh economy-boosting measures.

Hong Kong finished 0.39 per cent, or 94.91 points, lower at 24,399.60.

Tokyo shed 0.21 per cent, or 40.91 points, to finish at 19,713.45 after closing Monday at a 15-year high.

Seoul rose 0.23 per cent, or 4.78 points, to 2,041.37 and Sydney put on 0.22 percent, or 12.96 points, to close at 5,969.1.

Global markets have been on a broad uptrend since the Fed on Wednesday tempered talk of an early summer rate rise by saying there were still weaknesses in the US economy.

However, traders were rattled early Tuesday after HSBC's preliminary purchasing managers' index for China suggested that manufacturing activity saw a surprise contraction in March.

The index came in at 49.2, well down from February's 50.7 and far off the 50.5 forecast in a Bloomberg survey.

Anything below 50 indicates contraction and a reading above points to growth.

Despite the news Shanghai eked out a 10th gain since Premier Li Keqiang earlier this month said the government had the firepower to support the economy if it continued to struggle.

The comments fuelled expectations China will soon add to its two recent interest rate cuts.

"The economy is still sliding. But China is in the process of adjusting the structure of the economy so the market can tolerate slower growth," said Wu Kan, a fund manager at Dragon Life Insurance Co in Shanghai.

"We are in the bull market and any correction will be short."

GREECE HOPES SUPPORT EURO

In currency trade the euro dipped slightly after enjoying a recent rally as Greek Prime Minister Alexis Tsipras held talks with German Chancellor Angela Merkel in Berlin.

The single currency on Monday jumped from US$1.0770 and 129.41 yen to US$1.0945 and 131.02 yen in New York as the pair began meeting to discuss Athens' plans to renegotiate its austerity-laden bailout.

Analysts said hopes for a deal between the two countries, who have traded barbs in recent weeks, increased as the talks got off to a good start. In early European trade on Tuesday the euro was at US$1.0982 and 131.17 yen.

The dollar fetched 119.45 yen against 119.71 yen in New York late Monday.

The greenback took a hit after Fed vice-chair Stanley Fischer said there would not be a "smooth upward path" for interest rates, which analysts took as a further sign that the central bank will wait before announcing a rise.

"Fischer's comments have had a considerable impact on markets amid the market sentiment that has turned against the dollar since last week's Fed meeting," said Keisuke Hino, a foreign exchange trader at Mizuho Bank in New York.

"The one-sided dollar-buying scenario has crumbled, so there is still scope for more dollar selling."

On Wall Street on Monday, the Dow was flat, the S&P 500 shed 0.17 per cent and the Nasdaq eased 0.31 per cent.

Oil prices edged higher. US benchmark West Texas Intermediate was up 55 cents at US$48.00 while Brent rose 64 cents to $56.56 in early European trade.

Gold fetched US$1,191.35 against US$1,183.26 late Monday.

In other markets: - Taipei dropped 0.27 per cent, or 26.43 points, to 9,731.66.

Taiwan Semiconductor Manufacturing Co shed 1.30 per cent to TW$151.5 while Hon Hai Precision Industry was 0.21 per cent lower at TW$93.3.

- Wellington was marginally lower, dipping 4.69 points to 5,870.54.

Contact Energy was off 1.34 per cent at NZ$5.90 and Spark slipped 0.48 per cent to NZ$3.14.

- Manila closed 0.15 per cent lower, giving up 11.15 points to 7,828.94.

Ayala Land shed 1.20 per cent to 37.15 pesos and San Miguel Corp. lost 0.29 percent to 68.30 pesos.

- Bangkok closed down 0.37 per cent, or 5.56 points, at 1,514.45.

Oil company PTT rose 1.53 per cent to 331.00 baht, while Airports of Thailand lost 1.65 per cent to 298.00 baht.

- Jakarta ended up 0.19 per cent, or 10.55 points, at 5,447.65.

Lender Bank Tabungan Negara gained 2.19 per cent to 1,165 rupiah, while natural gas firm Perusahaan Gas Negara slipped 3.45 per cent to 4,900 rupiah.

- Singapore closed marginally higher, adding 3.13 points to 3,413.26.

Oversea-Chinese Banking Corporation gained 0.77 per cent to Sg$10.54 while Singapore Telecom rose 0.23 per cent to Sg$4.29.

- Kuala Lumpur closed 1.01 per cent, or 18.19 points, higher at 1,814.04.

AMMB Holdings gained 1.76 per cent to RM6.35, Tenaga Nasional rose 1.54 per cent to 14.46 while Petronas Gas lost 0.09 per cent to RM23.02.

- Mumbai fell 0.11 per cent, or 30.30 points, to end at 28,161.72.

Automobile major Tata Motors fell 3.27 per cent to 532.90 rupees, while telecom firm Bharti Airtel rose 2.86 per cent to 394.30 rupees.

AFP