Shanghai advanced in early trade
Thursday after another tepid reading on Chinese manufacturing activity
that will likely raise hopes for fresh monetary easing, while Japanese
shares pushed on to new 15-year highs thanks to a weaker yen.
The
dollar held up despite minutes from the Federal Reserve's April policy
meeting showing board members thought it unlikely the US economy would
be strong enough to hike interest rates in June.
Tokyo rose 0.42
percent, Shanghai gained 0.31 percent and Sydney put on 0.65 percent but
Hong Kong lost 0.43 percent and Seoul eased 0.72 percent.
A
preliminary reading of HSBC's purchasing managers index (PMI) for China
showed activity picked up in May but continued to shrink, despite
Beijing's efforts to kick-start the sluggish economy, including three
interest rate cuts since November.
The index registered 49.1 this
month, a two-month high but still below the 50 mark that separates
contraction from growth. It was at 48.9 in April.
"It remains
extremely hard if not impossible for any revival to be sustained," Wang
Tao, chief China economist at UBS Group AG (Other OTC: OUBSF - news) in Hong Kong, wrote in a report before the data release.
"Further
policy support is still needed to stabilise China's growth momentum and
arrest the passive tightening of monetary conditions," Wang said,
according to Bloomberg News.
Traders were given a weak lead after
the Dow and S&P 500 closed lower following the Fed minutes, which
raised concerns about the state of the world's top economy.
"Many
participants" at the US central bank latest meeting "thought it unlikely
that the data available in June" would meet conditions required for a
rate hike, the minutes said.
Policymakers expressed concern about
weak economic reports in the first quarter, although these data were
generally viewed as due to "transitory" factors, such as severe winter
weather and the West Coast port strike that ended in late February.
The Dow fell 0.15 percent and the S&P 500 slipped 0.09 percent but the Nasdaq edged up 0.03 percent.
The
minutes pressed on the dollar, with the unit buying 121.17 yen in early
trade, down from 121.32 yen in New York but still up from 121.02 yen in
Tokyo earlier Wednesday.
The euro bought $1.1114 and 134.66 yen against $1.1096 and 134.61 yen in US trade.
Oil
prices were lower but analysts said losses were limited after a drop in
US petroleum supplies and production raised optimism that a global
supply glut will ease soon.
US benchmark West Texas Intermediate
for July delivery fell 17 cents to $58.81 while Brent crude for July
eased five cents to $64.98.
Gold fetched $1,211.19 compared with $1,208.82 late Wednesday.
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