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Recovery Hopes Still Alive, Asian Markets Rise

CNBC.com
Friday, 15 May 2009 | 6:17 AM ET

Asian markets rose Friday as investors bought shares that stood to benefit the most from an expected global recovery, but still looked set to post their biggest weekly decline since March on worries equity markets have risen too far, too fast.

Investors are still looking to buy riskier assets after Japanese machinery orders fell less than expectedin March. The data supported a theme in regional data that companies are replenishing deleted inventories as orders trickle in and the sharp decline in Asian exports is slowing. But consumer demand in the United States and Europe remains weak, and a sustainable global recovery is unlikely until confidence in those major markets returns.

The U.S. dollar was steady against the euro and yen and was struggling to climb into the black for the week. Oil prices ticked higher, though were having difficulty hurdling $60 a barrel, especially after the International Energy Agency said on Thursday global demand for crude will reflect the sharpest decline this year since 1981.

Japan's Nikkei 225 Average advanced 1.9 percent, retracing some of the previous day's losses as machinery shares gained after data showed orders dropped less than forecast, while Sony surged after it projected a smaller-than-expected annual loss.

Seoul shares ended 0.78 percent firmer led by banks including KB Financial, while STX Enpaco jumped on its first trading day, but falls in Hynix Semiconductor weighed on the index.

Australian stocks rose 1.3 percent, bolstered by a sharp recovery in miner Rio Tinto after it committed to its planned $19.5 billion tie-up with Chinese metals firm Chinalco.

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Hong Kong shares climbed 1.5 percent, tracking gains on Wall Street, after a two-session drop provided elbow room for investors who missed the previous rally to get on board. Shares in HSBC, the UK's largest lender, climbed 3.1 percent, partly helped by falling interbank rates in London, which hit a fresh low on Thursday as the money market continues its steady recovery.

Singapore's Straits Times Index was pared back early gains, but closed 0.8 percent higher. Singapore Airlines, the world's largest carrier by market value, closed flat, despite posting a sharp drop in quarterly net profit, hit by fuel hedging losses and a weak travel market. Singapore's March retail sales fell a seasonally adjusted 5.1 percent from February due to lower sales of motor vehicles, government data showed.

China's Shanghai Composite Index edged 0.2 percent higher in shrinking turnover, with steel shares weak as power use data suggested China's industrial activity was still sluggish while the market consolidated after a recent rally.