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Asian markets bounce on upbeat US economic data

Kelvin Chan, AP Business Writer

People stand in front of an electronic stock board of a securities firm in Tokyo, Thursday, March 20, 2014. Asian stocks inched down Thursday after comments from the new head of the Federal Reserve suggested U.S. interest rates could rise sooner than financial markets were anticipating. (AP Photo/Koji Sasahara)

HONG KONG (AP) -- Asian stock markets bounced back Friday as upbeat U.S. economic data helped shake off worries about future increases in U.S. interest rates.

Trading was subdued as Japanese markets were closed for a public holiday.

The Conference Board index of leading indicators, a measure of U.S. economic health, rose in February by the largest amount in three months, suggesting growth should bounce back following a harsh winter. Separately, U.S. jobless benefits rose to near pre-recession levels, suggesting stable job market in the world's largest economy.

The numbers helped to perk up stocks after Federal Reserve chief Janet Yellen unsettled investors by suggesting earlier this week that U.S. interest rates could rise sooner than markets were anticipating.

"Better than expected data helped but will prove to be a double-edged sword as it increases the odds of Fed monetary tightening during 2015," Credit Agricole CIB strategist Dariusz Kowalczyk said in a commentary. "We expect range-bound currency and rates trading in Asia today, and slightly firmer stock markets."

South Korea's Kospi dropped climbed 0.6 percent to 1,931.22 and Hong Kong's Hang Seng gained 0.6 percent to 21,313.32. Australia's S&P/ASX 200 rose 0.8 percent to 5,338.10.

In mainland China, the Shanghai Composite Index advanced 1.8 percent to 2,029.76 even as China's currency remained weak. The yuan was trading at 6.2238, the lowest in about 13 months.

A recent loosening of exchange rate controls has helped speed the currency's decline. Analysts believe authorities are trying to clamp down on frothy credit growth and discourage speculators as for the past several years the yuan has slowly appreciated in value.

Michael Every, head of Asian financial market research at Rabobank, said the weakening yuan also shows that people are scrambling to get their money out of China, but the outgoing tide could roil the Chinese financial system.

"It's like playing Jenga with the markets. They've only pulled out one block. Will the rest come down by themselves?" he said.

On Wall Street, the Dow Jones industrial average gained or 0.7 percent to 16,331.05 on Thursday and the Standard & Poor's 500 rose 0.6 percent to 1,872.01. The Nasdaq composite climbed 0.3 percent to 4,319.29.

In currencies, the euro rose slightly to $1.3785 from $1.3779 in late trading Thursday. The dollar dipped to 102.36 Japanese yen from 102.39.

Oil prices fell. Benchmark crude oil for May delivery was down 59 cents to $98.31in electronic trading on the New York Mercantile Exchange. The contract fell 27 cents to settle at $98.90 on Thursday.