Asian markets inched up to an 11-month high Monday on mounting evidence that the global economic recovery is picking up speed, giving a boost to oil and copper prices while hurting the safe-haven U.S. dollar.
Two surveys showed Chinese factory growth accelerating in Julythanks to a revived domestic economy and slight pick-up in demand for its exports. The China PMI from brokerage CLSA hit a on-year peak.
The U.S. economy shrank at a smaller-than-expected 1 percent on an annualized pace in the second quarter, with economists expecting growth to resume in the second half of the year after the longest contraction on record.
The improving economic backdrop has contributed to an array of upbeat quarterly earnings reports around the world, prompting analyst upgrades to forecasts that are giving investors more confidence to shift funds into equities.
The U.S. dollar hit a 7-1/2-month low against a basket of currencies, hurt by the rebound in commodity prices on hopes the healing global economy will boost demand. The commodity-linked Australian dollar jumped to a 10-month high, while the pound struck a nine-month peak against the beleaguered greenback. U.S. crude oil prices hit a one-month high of just below $70 a barrel.
Japan's Nikkei 225Average ended flat after briefly hitting a new 10-month high, with profit-taking after recent sharp gains offsetting rises in auto and tyre makers on hopes that the auto sector has bottomed out. Bank shares rose after Mitsubishi UFJ Financial Group posted its first profit in three quarters, while a brokerage upgrade boosted Mizuho Financial Group more than 6 percent.
South Korea's KOSPI closed about half a percent higher, fueled by auto issues including Hyundai Motor on its solid monthly sales, while Hankook Tire rallied on positive brokerage comments and target price hikes.
Australian stocks ended 0.5 percent higher, boosted by the big banks following broker upgrades, which extended a strong run from July when the market logged its biggest monthly gain in nine years.
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In markets still trading, Hong Kong shares pushed back into the black, up 0.6 percent, after brushing past an 11-month high above 20,786 points earlier. Tencent, which operates China's largest online messaging community, jumped 6.7 percent after Credit Suisse raised its target price on the stock to HK$118.20 from HK$86. The investment house reiterated its "outperform" rating on the stock and raised Tencent's estimated earnings per share for 2009 by 6 percent on higher gaming and advertising revenues.
Singapore's Straits Times Index rose 0.2 percent, with banks swinging back into positive territory after the city-state's smallest listed bank, OCBC, announced second-quarter results rose 10 percent. OCBC shares initially sank 2 percent in the morning session, but recovered to trade just slightly higher.
China's Shanghai Composite Index was up over 1 percent led by China Shipping Container Lines, up 7.2 percent. China COSCO Holdings gained over 5 percent while Jiangsu Jiangnan High Polymer Fiber rose 8.3 percent.