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China growth rebound boosts Asia stock markets

People walk by an electronic stock board of a securities firm as Japan's bench mark Nikkei 225 Index closed at 14,588.51 after gaining 119.37 points, or 0.83 percent, in Tokyo, Thursday, Oct. 17, 2013. An eleventh hour agreement that averted a U.S. government debt default boosted Asian stock markets Thursday. (AP Photo/Koji Sasahara)

BANGKOK (AP) -- An acceleration in China's economic growth boosted Asian stock markets Friday after a short-term deal to raise the U.S. borrowing limit pushed Washington's budget battle into the background.

China's economic growth rebounded in the latest quarter to 7.8 percent from a two-decade low of 7.5 percent in the second quarter, helped by government stimulus measures.

The improvement allays fears of a deeper slowdown that could crimp world growth. But analysts have warned the rebound might not last because growth depends on government spending while global demand is weak.

Hong Kong's Hang Seng was up 0.6 percent at 23,243.46 and China's Shanghai Composite Index added 0.4 percent to 2,198.03. Australia's S&P/ASX 200 rose 0.7 percent to 5,317.80.

Japan's Nikkei 225 bucked the trend, dropping 0.2 percent to 13,559.16. Markets in India and Southeast Asia rose.

Concerns the U.S. government would default on Treasurys have receded after lawmakers reached an eleventh hour deal late Wednesday evening to raise the $16.7 trillion debt limit. But investor relief has been checked by concerns over the cost of Washington's drawn-out political battle and the likelihood of another high stakes standoff early next year when the short-term increase to the debt ceiling runs out.

The political dysfunction reflected by the budget crisis has baffled and frustrated investors, said Michael Every, Rabobank's head of Asia Pacific financial markets research in Hong Kong.

While the United States retains its central role in the global economy and global financial markets and remains the world's biggest capital market, "it's certainly doing everything it can to abuse that position," he said.

In energy markets, benchmark crude for November delivery was up 10 cents at $100.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.62 to $100.67 on Thursday.

The euro fell to $1.3663 from $1.3670 late Thursday. The dollar fell slightly, to 97.98 yen from 98 yen.