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China's Strong Rebound Lifts Asian Markets

CNBC.com with Reuters
Tuesday, 6 Jul 2010 | 6:53 AM ET

Asian markets reversed course on Tuesday, turning positive as a strong rebound in Chinese stocks lifted sentiment.

However, turnover was very light, with markets on Wall Street closed for the U.S. Independence Day holiday.

Shares in China outperformed their Asian peers this session, led by property and banking stocks, with the closing of subscriptions for Agricultural Bank of China's massive IPO helping to ease a liquidity squeeze.

The Shanghai Composite Index rose to 2,409.4 points, breaking above the psychologically important 2,400 level that has been a difficult level to breach for the past week.

The index posted its largest daily rise since June 21. It closed down 0.8 percent on Monday.

Shanghai's property sub-index rose 1.4 percent. China's No. 2 property developer Gemdale was the third-most active stock, up 0.5 percent.

Banks posted healthy gains following recent sharp losses, with ICBC up 1.9 percent and Bank of China jumping 3.2 percent.

Japan's Nikkei Average finished 0.7 percent higher in a volatile session, climbing back above support at a key retracement level after falling to a seven-month low of 9,091.7 points.

A rebound in Chinese stocks tempered the yen's gains and helped the benchmark index to pare losses.

TheNikkei closed the day up 71.26 points at 9,338.04. The broader Topix gained 1.2 percent to 847.24.

Shares of exporters gave up earlier losses as the yen pared gains, with Canon ending up 1.5 percent and Sony up 1.1 percent.

Mitsui O.S.K. Lines and other shipping companies rose between 1.6 to 1.8 percent, after falling earlier in response a sharp drop in the Baltic Exchange's main sea freight index.

Izutsuya surged 14 percent to 67 yen, after the major regional department store revised up its sales forecast, citing the drop in consumption amid the economic slowdown was not as severe as it anticipated.

Seoul shares also shed earlier losses to finish on positive ground, lifted by rises in tech and auto issues but gains were limited amid lingering economic concerns.

The Korea Composite Stock Price Index (KOSPI) rose 0.57 percent at 1,684.94 points .

LG Electronics outperformed after the firm said on Monday it plans to unveil a new Google Android-based smartphone, Optimus, in the second half.

Shares in the world's No.3 handset maker were up 4.1 percent and LG Display, the world's No.2 flat panel maker, jumped 4.4 percent.

Hyundai Motor advanced 4.5 percent and affiliate Kia Motor rose 2.6 percent.

But weakness in the won weighed on refiners and transporters, as it pointed to heavier imported crude costs. S-Oil, the country's No.3 crude refiner, declined 0.9 percent.

Bargain-hunting helped Australian stocks to reverse early losses and close up 1.3 percent, as investors bought beaten-down banking shares and the central bank kept interest rates steady.

The benchmark S&P/ASX 200 index rose 53.99 points to 4,276.1 in below-average volume, after hitting an 11-month low on Monday.

New Zealand's benchmark NZX 50 index dipped 0.2 percent to 2,952.4.

The Reserve Bank of Australia kept its key cash rate on hold at 4.5 percent for the second consecutive month on Tuesday. The central bank said its policy was appropriate, given uncertainties in the global economy.

Banking stocks chalked up strong gains, with ANZ and NAB advancing 2.9 percent and Macquarie up 4.4 percent.

Building materials firm Adelaide Brighton shares leapt 8.6 percent to A$2.92 after a profit upgrade for the first half.

Worries over a slowdown in the U.S. and China weighed on sentiment in Hong Kong but bargain hunting after recent weakness helped to limit losses.

The benchmark Hang Seng Index ended higher. Taiwan stocks advanced 1.5 percent, supported by gains in big tech names on brighter earnings prospects.

The main Taiex index fell in early trade but changed course after a rise in Chinese shares to close up 108.52 points at 7,548.48. The index had rebounded 2.6 percent in the past two sessions from a three-week closing low.

Top contract chipmaker TSMC, smartphone maker HTC and some shipping firms defied weakness due to brighter earnings outlook this year.

HTC and TSMC were the market's two most active stocks by turnover, rising 4.9 percent and 2.5 percent, respectively. HTC also got a boost from rating upgrades by Yuanta Research and HSBC on Monday.

Powerchip proved to be another bright spot, jumping 2.7 percent. A local newspaper said on Tuesday the island's top DRAM chipmaker could book a profit of up to T$10 billion ($311 million) in the first half of the year after its core chip business improved.

Yang Ming Marine Transport Corp rose 2.62 percent and Evergreen Marine gained 1.6 percent, lifting the transport sector up 0.6 percent.

In Southeast Asia, Singapore's Straits Times Index andMalaysia's KLCI rose.