Asia stocks up on hopes China to boost economy

Asian stocks up as hopes rise for China's central bank to undertake more monetary easing

Associated Press
Asia stocks up on hopes China to boost economy
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FILE - In a July 31, 2012 file photo trader William McInerney, center, works on the floor of the New York Stock Exchange. U.S. stocks fell Monday, Aug. 13, 2012 as evidence piled up that the global economic slowdown is dragging on Asia. (AP Photo/Richard Drew, file)

BANGKOK (AP) -- Asian stock markets were mostly higher Thursday after comments from China's premier added to hopes for more action to spur the world's No. 2 economy.

Premier Wen Jiabao, during a visit to eastern China earlier this week, was quoted by the official Xinhua News Agency as saying the country has the "conditions and capabilities" to meet its 7.5 percent economic growth target this year.

That raised expectations that the People's Bank of China would either lower the ratio of funds that banks must hold as reserves, known as the reserve requirement ratio, or lower interest rates. The bank so far this year has lowered both twice in an effort to boost lending and spur growth.

"I think it is unlikely they will cut interest rates because they still want to see prices coming down in the property sector," said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. "But like a lot of central banks, they are saying they are prepared to do sometime if it becomes necessary," he said.

Japan's Nikkei 225 index rose 1.5 percent to 9,060.59. Hong Kong's Hang Seng added 0.2 percent to 20,088.98 and Australia's S&P/ASX 200 added 0.9 percent to 4,318.80. Benchmarks in Singapore, Taiwan and Thailand also rose.

South Korea's Kospi was 0.1 percent lower at 1,954.08. Benchmarks in mainland China and New Zealand also fell.

Investors also think the European Central Bank will announce new policy measures in the coming weeks. The ECB is expected to restart its bond-buying program in order to hold down borrowing rates of Italy and Spain.

"The lack of negative surprises related to the Euro crisis so far this week has allowed for a mild mood of risk appetite, as hopes for policy action in a few weeks remains high," analysts at Credit Agricole CIB in Hong Kong wrote in a market commentary.

Among individual stocks, Lenovo Group Ltd. jumped 5.5 percent in Hong Kong after the Beijing-based personal computer maker — the world's second-largest — reported its latest quarterly profit rose 30 percent.

Hong Kong-listed China Yurun Food Group, a major meat producer, fell 9.9 percent on worse-than-expected results. Japanese electronics maker Panasonic Corp. rose 5.9 percent and Hitachi Ltd. added 4.3 percent.

U.S. stocks closed mostly higher Wednesday after signs that the economic recovery is on track, albeit at a slow pace.

In a sign that of improving manufacturing after a weak spring, the Federal Reserve reported that U.S. industrial production increased last month as factories made more cars, computers and airplanes.

Also, consumer prices were unchanged in July from June, as a small drop in energy costs offset slightly higher food prices. The consumer price index hasn't changed since March, which means that inflation is in check.

Lower inflation gives the Fed more leeway to launch new programs intended to rekindle the economy. The Fed signaled at a meeting in late July that it is ready to act if growth and hiring stays weak.

The Dow Jones industrial average fell less than 0.1 percent to 13,164.78 on Wednesday. The broader Standard & Poor's 500 index gained 0.1 percent to 1,405.53, and the Nasdaq composite index lost 0.5 percent to 3,030.93.

Benchmark oil for September delivery was down 7 cents to $94.26 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 90 cents to finish at $94.33 per barrel Wednesday in New York, its highest level since mid-May.

In currencies, the euro fell to $1.2277 from $1.2290 in New York late Wednesday. The dollar rose to 79.30 from 78.88 yen.

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