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HONG KONG (Reuters) –
Asian stocks rose on Friday, led by consumer and technology-related shares as confidence in a sustainable recovery grew, though stocks in Shanghai bucked the trend and dropped 3 percent on worries about a fall in bank lending.
The U.S. economic contraction in the second quarter was not as bad as expected, and gross domestic product actually grew if inventories were stripped out, raising hopes that pent-up demand for Asia's exports would return slowly.
Indeed, despite weakness on Chinese markets, modest gains on Wall Street helped support Asian stocks.
Stocks of companies involved in making parts for technology exports, such as Shin-Etsu Chemical in Japan, Taiwan Semiconductor and Samsung Electronics in South Korea, gave a big boost to their domestic indices.
Japan's Nikkei share average (.N225) rose 0.5 percent, just below the highest intraday level since Oct 6, which was hit on Wednesday. Shares of Kyocera (6971.T) and Canon Inc (7751.T) were among the biggest supports to the index.
Japanese stock market gains came despite a record decline in core consumer prices and an all-time high in the domestic jobless rate. Some analysts looked toward this weekend's elections and a likely win by the opposition.
"All these negative trends can be turned around if DPJ does win Sunday elections, inspires confidence, and successfully implements its plans to boost domestic consumption," said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong in a note.
The MSCI index of Asia Pacific stocks outside Japan rose 0.6 percent (.MIAPJ0000PUS), near the top of a narrow range maintained in August. However, the technology sector index for the region rose 1.5 percent (.MIAPJIT00PUS).
Hong Kong's Hang Seng index (.HSI) underperformed the region, slipping 0.6 percent, and dragged down Shanghai stocks (.SSEC), which fell as much as 3 percent on the day before paring some losses.
The decline in China's domestic market caused the Australian dollar to weaken. China is Australia's top trade partner.
Local media reported new loans extended by four of China's biggest state-owned banks in August slowed sharply from July.
"The market now expects new lending in August by all banks will be at most a little more than 200 billion yuan," said analyst Cao Xuefeng at Western Securities in Chengdu.
The lending estimate compares with an average monthly total of more than 1 trillion yuan in the first half of this year.
Despite declines on Thursday in Asian and European stocks, Wall Street posted small gains, thanks to strength in the energy sector. That helped Asian markets gain momentum early in the session.
While the global equity rally that has been lasted since March sputtered a bit in August, investors have been steadily putting their piles of cash to work.
Money market funds, a cash equivalent, saw a net outflow of $5.75 billion in the latest week, bringing year-to-date redemptions to around $250 billion, about half of what was committed in 2008 to these funds, fund tracker EPFR Global said in a note.
In the week to Wednesday, all equity funds tracked by EPFR took in a net $7.32 billion and fixed income funds saw net inflows of $4.59 billion.
CURRENCIES
The Australian dollar was largely unchanged on the day at US$0.8386 after a 1.6 percent climb overnight, remaining around a cent from an 11-month high around US$0.8480 reached two weeks ago.
A steady flow of solid economic data has led dealers to price in at least one quarter percentage point rise in the Reserve Bank of Australia's base rate by November and speculate on a possible move in October.
"The data from Australia has been pretty strong, suggesting the economy has a fair bit of momentum," said John Kyriakopoulos, currency strategist at National Australia Bank. "Interest rate markets are now bringing forward the prospects of a rate hike to as early as October and that is helping the Aussie."
The ICE Futures U.S. dollar index (.DXY) was subdued after a 0.7 percent decline overnight kept it in a downward trend.
U.S. crude for October delivery rose 26 cents to $72.75 a barrel after jumping $1.06 on Thursday.
U.S. economic data released on Wednesday was a shot in the arm and helped confidence that energy demand will recover further, overshadowing reports showing an increase in inventories.
Metals prices also reflected optimism about the demand for raw materials. Three-month copper on the London Metals Exchange was up 2.4 percent to $6,425 a ton.
(Additional reporting by Anirban Nag in SYDNEY and Claire Zhang and Edmund Klamann in SHANGHAI)
(Editing by Don Durfee)
