Asian markets rise as China affirms loose policy

AP News
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Posted: Dec 24, 2009 6:32 AM

European stock markets moved sideways Thursday as trading at some of the continent's major bourses was subdued before the Christmas holiday.

In Europe, the FTSE-100 index of leading British shares was up 11.27 points or 0.2 percent at 5,384, while France's CAC-40 was up 3.16 points or 0.1 percent at 3,914.20. Germany's DAX was closed for the day, while the London market was scheduled to close early at 12:30 p.m. because of the holiday.

Gains were seen capped ahead of the long weekend with sharply constrained trading volumes as well as a surprisingly weak U.S. housing report Wednesday that showed sales of new homes dropped in November to the lowest level since April.

Contrary to many expectations, stocks around the world have rallied this week _ many analysts were anticipating a modest pullback as investors shut up shop for the year by booking profits accumulated during the nine-month bull market.

Earlier Asian markets shrugged off a lackluster performance on Wall Street to move higher Thursday amid expectations China will maintain loose monetary policy.

There was also an element of catch-up for Asian stocks as the region's markets, up massively from their March lows, have this month lagged gains in developed markets. Oil prices held above $77 a barrel while the dollar fell slightly versus the yen and the euro.

China's Shanghai Composite Index jumped 79.63 points, or 2.6 percent, to close at 3,153.41 and Hong Kong's Hang Seng climbed 188.26, or 0.9 percent, to 21,517.

Japan's Nikkei 225 stock average rose to a fresh three-month high as the yen's recent weakness lifted exporters amid thin Christmas season trade. The index gained 158.89 points, or 1.5 percent, to 10,536.92, the highest finish since late September.

Most other markets gained, including Seoul's Kospi, which added 1.3 percent, and Taiwan's Taiex, up 0.8 percent. On Friday, markets around the world will be closed for the Christmas holiday though Japan and China will continue to trade.

On Wednesday, the Dow Jones industrial average rose 1.51, or 0.01 percent, to 10,466.44. The Standard & Poor's 500 index rose 2.57, or 0.2 percent, to 1,120.59, while the Nasdaq composite index gained 16.97, or 0.8 percent, to 2,269.64.

The U.S. stock performance came amid mixed economic data.

The Commerce Department said sales of new homes plunged 11.3 percent in November to their lowest level since March, confounding economists who had forecast an increase.

On the positive side, personal incomes rose 0.4 percent in November _ the fastest rate in four months _ helped by higher wages. Spending rose 0.5 percent. Both figures, however, fell slightly short of market expectations.

Mark Tan, who helps manage about SG$15 billion ($10.7 billion) of equities and bonds at UOB Asset Management in Singapore, said Asian markets were playing a bit of catch-up.

"Basically, Asia has underperformed the developed markets this month," he said.

Oil prices extended gains above $77 a barrel in Asia as a larger than expected drop in U.S. crude supplies fueled investor optimism that consumer demand is improving.

Benchmark crude for February delivery was up 65 cents to $77.32 in electronic trading on the New York Mercantile Exchange. The contract rose $2.27 to settle at $76.67 on Wednesday.

In currencies, the dollar fell 0.3 percent to 91.27 yen but remains near its highest level since late October. The euro rose 0.2 percent to $1.4359.

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AP Business Writers Kelly Olsen in Seoul and Joe McDonald in Beijing, and Associated Press Writer Shino Yuasa in Tokyo contributed to this report.