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Hong Kong leads stock gains in Asia on China data


[HONG KONG] Hong Kong stocks rallied on Tuesday after a five-day sell-off with data indicating forecast-beating growth in Chinese factory activity providing a boost but uncertainty over the US presidential race keeping investors on edge.

The closely watched purchasing managers index hit its highest level in more than two years, Beijing said, indicating the important manufacturing sector - and the world's number two economy - is levelling out.

A separate, private index also beat expectations to hit its highest mark since July 2014.

The figures come weeks after official data showed economic growth stabilising and putting the government on track to achieve its annual target, while another reading showed a first increase in factory gate prices for four years.

"The market has turned more positive and confident that China's economy will stabilise in the fourth quarter," Linus Yip, a Hong Kong-based strategist at First Shanghai Securities, told Bloomberg News.

"After a correction in Hong Kong and being at a relatively low level, the market needed some stimulus to gain power and the China figures helped trigger that."

Hong Kong stocks jumped 1.2 per cent in the afternoon, having retreated almost three percent in the previous five days. Shanghai ended up 0.7 per cent and Tokyo reversed early losses to end 0.1 per cent higher.

Singapore put on 0.4 per cent in late trade.

But Sydney shed 0.5 per cent and Seoul was slightly lower while Wellington and Taipei also finished lower.

Confidence is still fragile after Friday's bombshell news that with just under two weeks to the election, the FBI was investigating additional emails connected to Democratic nominee Hillary Clinton, Wall Street's preferred candidate.

"There is a lot of uncertainty," Tony Farnham, a Sydney-based strategist at Patersons Securities, said. "There's plenty happening over the next week and there's a degree of caution around the key events."

However, the Mexican peso strengthened against the dollar, having tumbled Friday on the FBI news as Clinton's rival Donald Trump has promised to tear up a trade deal between the two countries and build a wall on their border.

In Asian trade the dollar bought 18.85 pesos, compared with 18.96 pesos the day before.

There was little movement between the dollar and the yen after the Bank of Japan once again pushed back its inflation timeline. The central bank now expects prices to move "toward" two per cent by March 2019 - four years later than its original goal, which was set by governor Haruhiko Kuroda in 2013.

Analysts said the move could mean the BoJ will hold off new easing until late next year to give prices time to pick up.

The pound dipped back against the dollar, having enjoyed a rare bump after Bank of England governor Mark Carney said he would extend his tenure by another year, putting an end to speculation over his future.

Sterling ended on Monday at US$1.2242, one cent up from earlier in the day. On Tuesday in Asia it fetched US$1.2222.

Investors were also keeping an eye on a string of possible market-moving events this week, including gatherings of the Federal Reserve and Bank of England.

The end of the week will also see US jobs figures, which will provide a better idea about the Fed's plans for interest rates.

Oil prices made meek gains, having been hammered again on Monday on worries about the chances of the success of Opec's agreement in September to cut output, following the failure last week to agree details.

The commodity saw some support from news of a fire and explosion in Alabama that disrupted operations of the largest gasoline pipeline in the United States.