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Asian Markets Rise on Positive Stress Tests Results

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello and welcome to “Asia Market Daily”.

I am Saijal Patel reporting from CNBC's Asia headquarters and here's our look at the top stories in Asia today.

Most markets across the region gained, reaching a one-month high during the trading day.

News that most European banks passed the stress tests, boosted optimism over the health of the global economy and that help kick start Asia's trading week.

Sentiment improved further on reports that South Korea's second-quarter economic growth and Japan's exports in June exceeded expectations.

Nikkei 225 gained, closing higher by 0.77 percent

The yen fall to a seven-week low against the euro boosted the exporters.

Traders are expecting a good week for the Nikkei as Japan's corporate earnings season starts tomorrow.

All eyes are on blue chips like Sony, Mizuho and Sumitomo Mitsui Financial, where hopes are for positive numbers.

(SOT) Mark Konyn, CEO, RCM Asia Pacific:

“Therefore as earnings come through, we do see, both in the US and in this region, earnings maintaining momentum. We therefore see strong cash flows, underlying cash flows, on behalf of institutions and individual investors, we do see markets performing better in the second half when compared to the first half of the year."

Over in Korea, KOPSI closed higher by 0.6 percent.

Further south in Australia, markets also on the up, gaining 0.58 percent at the end of trading day.

Mining shares in the spotlight with BHP and Rio Tinto making gains.

Further north, China markets bucked the trend and were mostly in negative territory during the trading day.

But some investment managers like Erwin Sanft from BNP Paribas are looking longer term and still positive on mainland companies.

(SOT) Erwin Sanft, Head of China and HK Research, BNP Paribas Securities:

“The big piece of good news to look forward to for the China market is that the first quarter next year, we're going to see quite strong year-on-year growth and cash flow, even though reported earnings are not going to be exciting. And the reason for that is the first quarter just gone, we had a big decline, 65% year-on-year drop in cash flow, so as we roll into next year, cash flows will be looking a lot better. The large caps do have earning stability, so construction is one area where we've got visibility and growth through to 2012, for the big railway construction firms, banks likewise. The ride offs of any bad landing that's been done at least is going to be very small. Overall, bank earnings are still going to grow.”

We take a closer look now at growth numbers out of South Korea today.

Latest data show the economy grew faster than expected in the second quarter.

Gross domestic product increased 1.5 percent on quarter.

Economists were only expecting an improvement of 1.3 percent.

On year, the economy grew 7.2 percent.

This brings South Korea's first half GDP numbers to 7.6 percent, posting its fastest expansion in a decade.

As economic growth picks up, expectations for higher interest rates follow.

Rajiv Biswas from The Economist Group.

(SOT) Rajiv Biswas, Director, Southeast Asia, The Economist Group:

“I think clearly they need to continue to pursue their exit strategy. Further rate rises, withdrawal of fiscal stimulus. One of the reasons we saw very strong growth in Q1 was the fiscal stimulus aspect, so I think now we see that reducing and private sector taking much of the role in driving future growth.”

The Bank of Korea will be meeting on 12th August to deliberate on its monetary policy.

Meantime, the Reserve Bank of India started its 2-day meeting, and will unveil the quarterly review its monetary policy tomorrow. A rate rise is also on the cards.

(SOT) Rajiv Biswas, Director, Southeast Asia, The Economist Group:

“The Indian central bank really needs to raise rates again, by probably about another 25 basis point, at least, this week, because inflation in India is running at over 10%. Their comfort zone, their target range is around 5-and-a-half, so they're well behind the curve there, so clearly they need to act. They don't want to be too drastic in their actions, so I think we'll just see a step-by-step process for the remainder of this year.”

Beijing is under pressure to let the yuan rise.

In the U.S., regulators are preparing for a hearing to study China's progress.

There's also talk about taking the case to the WTO.

But the World Trade Organization's Director-General, Pascal Lamy says this is not a case for the WTO, it’s a case for the IMF.

He speaks to Cheng Lei in an exclusive CNBC interview.

(Package starts)

Lamy: Now if you look at the WTO agreement, which we administered there is an article in there, which has been in there since 1947, and which roughly says that once you've taken trade opening commitments within the GAAT you cannot frustrate this commitment through currency policy. There is a place where this link between implementing sincerely your trade opening commitments and your currency policy is related.

Lei: But you've said that China is abiding by its WTO commitments, so that means its not frustrating

Lamy: It's not for that I'm saying that for overall china is abiding by its WTO commitments, but if on the specific case. Your asking me the question on indigenous innovation, on securing the prices, on intellectual property rights, the moment you go into specifics I have to retreat because it's not for me to prejudice a possible dispute will say. I am forbidden to pre-empt any interpretation or determination. The moment one WTO member starts saying publicly we can start litigating against country X or whatever, I have to shut up, otherwise the risk is that I would be seen as departing from my normal neutrality.

(Package ends)

Well, that wraps up today's Asia Market Daily from CNBC.

I'm Saijal Patel.

Join me again tomorrow evening.

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