Asian shares advance as China data beats forecast

Reuters: Asian shares rose on Thursday as much stronger-than-expected Chinese trade data magnified positive momentum overnight from global markets and kept alive hopes for a recovery in the world’s second-largest economy.

China’s exports grew 14.1% in December from a year ago to hit a seven-month peak, exceeding market expectations for a 4% rise, while imports grew 6% on the year, double the forecast, boosting the country’s trade surplus to $31.6 billion, from a surplus of $19.6 billion in November and sharply above a forecast of $19.7 billion.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, advancing immediately on the data after hovering around levels barely changed from Wednesday.

The latest economic report from China, Australia’s largest trading partner, boosted Australian shares up 0.3% and the Australian dollar up 0.3% to $1.0542.

“China has shown signs of cyclical recovery since last fall, and the trade figures offered a piece of evidence,” said Tetsuro Ii, the Chief Executive of Commons Asset Management.

A weak reading from China could have turned sentiment bearish for risk assets.

Global equities rose modestly on Wednesday after aluminium maker Alcoa Inc kick-started the U.S. earnings season with a brighter outlook for global demand. U.S. agribusiness giant Cargill Inc followed with a four-fold increase in quarterly earnings on Wednesday.

The FTSEurofirst 300 ended at a 22-month closing high on Wednesday. London copper was up 0.2% at $8,096.25 a ton while U.S. crude futures rose 0.3% to $93.38 a barrel as the Chinese data raised hopes for firmer demand for commodities.

Japan’s benchmark Nikkei stock average extended gains to 0.8% as the yen resumed its weakening trend after a pause in the last couple of sessions, buoying exporters.

Foreign investors remained net buyers of Japanese stocks last week for an eighth consecutive week, while Japanese investors were net sellers of foreign bonds for the second week after two weeks of net purchases, government data showed on Thursday.

The dollar had risen about 12% over the past two months against the yen, contributing to the Nikkei’s 22% jump in the same period, on expectations for bolder monetary easing from the Bank of Japan under Japan’s new government.

The Japanese economy is expected to recover a little in 2013 if Prime Minister Shinzo Abe’s policies of massive fiscal spending, aggressive monetary easing and a weaker yen produce the momentum needed to lift Japan from stubborn deflation.

The dollar rose 0.2% to 88.07 yen, inching closer to its highest since July 2010 at 88.48 reached on Friday. The euro was also up 0.1% to 114.93 yen. It last week hit 115.995 yen, its highest since July 2011. The euro eased 0.1% to $1.3046 ahead of the ECB’s policy meeting, where the central bank is expected to keep interest rates steady. The Bank of England also holds its policy meeting later on Thursday.

Spain will test investor appetite for its debts when Madrid holds its first debt sales of 2013 later in the session. The Spanish auction could also offer clues on the timing of a much-anticipated request by the government for international financial aid.

Wariness over debt issues is not confined to the euro zone, with investors also watching U.S. debt ceiling negotiations after lawmakers narrowly avoided the fiscal cliff at the turn of the year.