GO
Loading...

Strong Commodities Support Asian Resource Stocks

CNBC.com
Wednesday, 10 Jun 2009 | 5:29 AM ET

Commodity-related shares led Asian stocks higher Wednesday, snapping a two-day decline, after metals and oil prices rallied on a decline in the U.S. dollar and as hopes grew for stronger Chinese industrial demand.

Investors are scouring fresh Chinese data this week for signs that the economy remains on the road to recovery. Expectations that the economy is picking up have helped buoy prices of key metals like copper, which hit its highest level since Oct 15 on Tuesday.

Dealers also chipped away at the U.S. dollar as futures markets reflected second thoughts about a possible Federal Reserve rate hike this year, while the Australian dollar rose further above US$0.80 after an index of consumer confidence in the resource-rich country showed the biggest gain in 22 years. U.S. light crude for July delivery rose above $70 a barrel to fresh seven-month highs, having climbed 58 percent since March 2009.

Japan's Nikkei 225 Average gained 2.1 percent to hit an eight-month closing high, with resource shares such as Mitsubishi Corp leading the market higher on strong oil and metals prices. Mitsui O.S.K. Lines and other shippers powered higher on a brokerage upgrade, with expectations of good Chinese indicators due out later this week helping to overcome a fall in Japanese machinery orders.

South Korea's KOSPI closed 3 percent higher, led by key blue chips and banks as market sentiment turned favorable following recent losses, while retailers jumped on strengthening
earnings hopes.

Australian shares finished 2.3 percent higher to a seven-month closing high, as energy and mining stocks got a boost from firmer oil and base metal prices.

More From CNBC.com

Hong Kong shares rose over 4 percent, recovering from two days of losses. Consumer goods exporter Li & Fung dropped 5.8 percent after one of Germany's biggest retailers, Arcandor filed for insolvency after the German government rejected its pleas for emergency state aid. Li & Fung, which is a buying agent for Arcandor including its Karstadt, Primondo and Quelle businesses, said the German company owed it $5.4 million in outstanding agency commissions.

Singapore's Straits Times Index rose nearly 2 percent. City Developments, Southeast Asia's second-largest developer, climbed 2.75 percent after it said it had refinanced a S$1.2 billion ($822.5 million) loan to develop a property project in Singapore.

China's Shanghai Composite Index rose 1 percent after price data came in mostly in line with forecasts. China's annual pace of consumer price deflation eased in May to 1.4 percent, from 1.5 percent in April, although the rate of decline in producer prices intensified. Construction-related shares were strong, with contractors China Railway Erju and Tengda Construction climbing by their 10 percent daily limit.