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Asian Markets End Mixed, Investors Turn Wary

CNBC.com
Tuesday, 2 Jun 2009 | 6:18 AM ET

Improving global manufacturing data lifted some Asian markets Tuesday, bringing a regional index near to levels before the collapse of Lehman Brothers in September, but the pace of gains slowed as investors weighed how much longer a heady, three-month rally will last.

The gains come after reports on Monday showed contractions in manufacturing activity in the United States, the euro zone and the United Kingdom last month had eased, while China saw factory activity expanding for a third consecutive month.

The reports reinforced expectations the worst in the global economy is over, while the widely expected bankruptcy filing by General Motors on Monday removed another major risk factor hanging over financial markets, at least in the near-term.

However, some of the other riskier asset classes which rose on Monday steadied in Asia on Tuesday, highlighting investor caution after a steady run-up in prices. U.S. crude futures slipped but held above $68 a barrel as investors took profits from a jump of more than 3 percent the day before which carried oil to its highest level since early November. Safe-havens such as the dollar also steadied on Tuesday after falling in the previous session.

Japan's Nikkei 225 Average rose 0.3 percent, logging an eight-month closing high for the second straight day, with carmakers up after uncertainty about General Motors cleared in the wake of its bankruptcy filing. Blue-chip tech shares such as Advantest climbed on growing hopes for the U.S. economy, but gains were checked by falls in shippers, with investors locking in profits after recent sharp gains.

South Korea's KOSPI finished 0.16 percent lower, weighed down by reports North Korea was readying a mid-range missile launch, but shipping firms outperformed.

Australian stocks rose 1.6 percent, its highest close in almost seven months, as surprisingly strong economic data boosted retailers and builders and fueled hopes the nation could avoid recession. Retail stocks jumped, with J B Hi Fi up 5.4 percent and Harvey Norman rising 4 percent.

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Shares in Hong Kong pulled back 2.6 percent as investors deemed some blue chips expensive after the recent rally. Bank shares led losses on the Hang Seng Index, with Chinese lenders slipping after Goldman Sachs reportedly sold a part of its holding in ICBC while global lender HSBC took a breather following the 25 percent run-up in its stock in May. But resources counters stayed strong in both markets for a second day after data from both China and the U.S. showed demand for materials was stabilizing.

Singapore's Straits Times Index slipped 0.2 percent into the red, but shares of Neptune Orient Lines surged 9.8 percent after it said it plans to raise $972 million in a rights issue, backed by Singapore state investor Temasek, to repay debt.

China's Shanghai Composite Index gained 0.1 percent, boosted by resource stocks. PetroChina, Asia's largest oil and gas producer and the Shanghai index's most heavily weighted stock, rose, extending a nearly 5 percent gain on Monday after China announced its second and biggest increase in fuel prices this year, although analysts said the hike was smaller than expected.