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Asia: Stocks rise as mixed US data damp rate hike outlook

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[SINGAPORE] Asian stocks rose as mixed US economic data supported the case for monetary policy to remain accommodative. Japanese shares fell as the yen strengthened.

The MSCI Asia Pacific Index gained 0.1 per cent to 138.28 as of 9:01am in Tokyo. Japan's Topix index lost 0.1 per cent as the yen traded at 103.88 against the US dollar. Investors are putting off taking risks ahead of the third US presidential debate on Wednesday, and as they dissect economic data and rhetoric from policy makers to weigh the outlook for when the Federal Reserve will raise US borrowing costs.

Fed Vice-Chairman Stanley Fischer Monday said that he sees limits to how far the central bank can pursue a strategy aimed at continuing to reduce unemployment.

"We're likely to see some choppy trading until we get some of these risk events out of the way, such as the last US presidential debate," James Woods, an analyst at Rivkin Securities in Sydney, said by phone.

"Momentum seems to be building up for a December rate hike by the Fed."

Mr Fischer didn't comment directly on when he thought the Fed should next raise rates, though he said the central bank was "very close" to meeting its statutory goals of creating full employment with stable prices. Investors are also closely watching earnings out of the world's biggest economy.

South Korea's Kospi index added 0.1 per cent. Australia's S&P/ASX 200 Index was up 0.2 per cent.

New Zealand's S&P/NZX 50 Index tumbled 1.3 per cent to the lowest since July 6, extending declines since reaching a record last month as investors dumped winners from earlier in the year. The losses were led by companies with high-dividend yields, including Meridian Energy Ltd.

"There are an unusual mix of local investors taking profits and a bit of foreign selling as well," Grant Williamson, an investment adviser at Hamilton Hindin Greene, a brokerage in Christchurch, New Zealand, said by phone.

"I'm still viewing this as a pretty healthy correction after some pretty strong gains where we have outperformed most world markets for some time."

Markets in China and Hong Kong have yet to start trading. Futures on the FTSE China A50 Index added 0.2 per cent in their most recent trading, while those on the Hang Seng Index gained 0.3 per cent.

China Focus

Hong Kong stocks on Monday extended last week's slump, with the Hang Seng Index sliding 0.8 per cent as casino operators declined after Chinese authorities detained employees from billionaire James Packer's Crown Resorts Ltd.

The next focal point for the markets will be Chinese economic data on industrial production, retail sales and gross domestic product that are all due on Wednesday after a report last week showed the nation's exports unexpectedly dropped in September.

GDP probably expanded 6.7 per cent from a year earlier in the three months through September, the same pace as the previous two quarters and smack in the middle of the government's full-year target pace, according to a Bloomberg survey of economists. Industrial output, fixed-asset investment and retail sales all likely picked up last month, surveys show.

"We're seeing continuing stabilisation in China even though recent export data disappointed," Rivkin's Mr Woods said.

"China's growth is a major driver of sentiment globally." China's foreign-currency shares plunged in late trading on Monday, with the Shanghai B-share index tumbling 6.2 per cent, sending traders scrambling for reasons to explain the sudden volatility in a largely moribund market. The sudden slump weighed on yuan-denominated Shanghai A shares, which lost 0.7 per cent. The Shanghai Composite Index, comprising both yuan-denominated A and foreign-currency B shares, slid 0.7 per cent.

Futures on the S&P 500 Index rose 0.1 per cent. The US equity benchmark index dropped 0.3 per cent on Monday. The Federal Reserve Bank of New York said its Empire State index declined this month as analysts projected an expansion, while data on US manufacturers signalled a recovery.