Asian Markets Hit 7-Month High, Financials Rally

Asian stocks punched to a seven-month peak Monday, fueled by confidence the global economy is recovering faster than expected and on a further jump in Taiwanese shares on hopes for an influx of Chinese investment.

Japanese markets are closed for the Golden Week holidays. Markets there closed until Thursday. The Nikkei 225 Average closed at 8,977.37 on Friday.

The Australian dollar, seen as the currency market's bellwether for risk-taking, struck a seven-month peak while safe-haven government bonds retreated. Data last week in Asia showed South Korean exports and industrial production both improving more quickly than expected, suggesting that regional exporters are needing to step up activity after having aggressively slashed inventories of goods.  Investors are also feeling more confident that the U.S. financial system has already suffered the worst of its crisis and is getting healthier, just before the government releases the results of stress tests later this week.

Shares in energy stocks were among the leaders after crude oil futures gained 4 percent to trade above $53 a barrel in the Asian session, on the U.S. consumer confidence and data showing oil supply fell in April.  The Australian dollar climbed to hit a seven-month high against the greenback as market players favored the currency still offering a 3 percent yield in a world where U.S. and Japanese short-term yields are pinned near zero. The dollar edged against the yen , but weakened against the euro .

South Korea's KOSPI finished up 2 percent to close at a seven-month high, powered by a rally in financial stocks including KB Financial Group and gains in shipbuilders and retailers. KB Financial, which runs South Korea's biggest lender Kookmin, jumped by its daily limit of 15 percent -- the first time it has risen by the daily limit since late November. Hyundai Heavy Industries rose 7.4 percent and Lotte Shopping climbed 8.9 percent.

Taiwan's TAIEX Index soared 6 percent, taking gains to 13 percent in just two days as investors see a wide-reaching deal coming later in the year as spurring heavy Chinese investment in the island, especially in financial firms.

Australian shares rose 3 percent, led up by miners and banks, as a delay in the government's carbon emissions trading scheme and hopes of an economic recovery boosted sentiment.

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Hong Kong shares extended gains to rise 5.5 percent, sending the main index to its highest level since mid-October 2008, with investors cheered by signs of recovery in China and stabilization in the U.S. economy.

Singapore's Straits Times Index continued to climb, up over 5.5 percent. Financials were sharply higher with both UOB and DBS Group gaining over 4 percent.

China's Shanghai Composite Index rose more than 3 percent, boosted by rising confidence in the economic outlook after the CLSA Purchasing Managers' Index rose to a nine-month high in April. Steel stocks rose following news that China aims to eliminate 25 million tons of steel capacity by end 2011. The move will increase competitiveness of local steel mills and accelerate consolidation in industry.

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