China data boosts world stocks, Aussie dollar

Credit: Reuters/Toru Hanai
By Anshuman Daga
Jul 12, 2011 11:17pm EDT

SINGAPORE (Reuters) - Asian stocks, metals, and the Australian dollar jumped on Wednesday after Chinese economic growth data soothed some worries over a global slowdown at a time when euro zone debt worries are also deterring investors.

The MSCI index of Asia-Pacific shares outside Japan extended early gains to trade 0.8 percent higher by 0230 GMT, with stock markets in Australia, .AXJO and South Korea .KS11 both up 0.5 percent.

China's annual gross domestic product grew 9.5 percent in the second quarter of 2011, above market whispers of 9.0 percent ahead of the release and 9.4 percent forecast by a Reuters poll.

"With GDP growth slowing to a more sustainable pace of just over 8 percent annualized in the first-half of the year, the monetary authorities should be encouraged that the tightening over the past year has been effective," said George Worthington, economist at IFR in Sydney.

"The data should also help to dispel the wilder fears of an economic collapse in China as a result of the anti-inflation fight," he added.

Copper on the London Metal Exchange extended early gains after the Chinese data, and was up 0.5 percent at $9,698 a tonne.

EURO, AUSSIE

In the currency markets, the euro edged up to 1.3996 per dollar after the China's GDP figures. However, the single currency remained under pressure ahead of yet another emergency meeting of European Union leaders.

European Union leaders appear set to hold an emergency summit on Friday after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion spreading to Italy and Spain.

The Australian and New Zealand dollars climbed, recouping almost all of the losses made in the previous session after upbeat Chinese data soothed market worries about a hard landing for the world's second biggest economy.

China, a major trading partner of Australia and New Zealand, has been tightening policy to fight inflation, raising fears the economy might slow sharply.

The Aussie jumped more than 30 pips to $1.0635 while the New Zealand dollar, the worst performer of major currencies overnight, bounced back to around $0.8220 from its late New York level of $0.8180.

Hong Kong stocks finance/markets/index?symbol=hk%21hsi">.HSI advanced 1.0 percent, supported by a 5.2 percent rise in Agricultural Bank of China's (1288.HK) on strong earnings forecast. Risky assets have taken a beating this week on growing worries that Greece's debt crisis could lead to more countries requiring financial aid.

This week, China's premier and the country's central bank governor vowed to prevent stubbornly high inflation from upending the economy, reinforcing expectations for more increases in interest rates and bank reserve requirements.

Inflation rose to a three-year high of 6.4 percent in June.

Spot gold was steady at $1,565 per ounce, while U.S. crude oil futures fell 0.5 percent to $96.90 a barrel.

http://www.reuters.com/article/2011/07/ ... EB20110713