Asian stocks hit six-week high, gold steadies after jump

Wednesday, 24 July 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Asian stocks rose to six-week highs on Tuesday, led by a rally in Chinese shares, while gold took a breather after its biggest one-day gain in more than a year. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.3% to their highest since early June, and Tokyo’s Nikkei erased early losses to be up 0.8%. Among the best performers, Hong Kong’s Hang Seng advanced 2.1% and the CSI300 of the leading Shanghai and Shenzhen A-share listings jumped 3.2%.

Sentiment in China was boosted by separate media reports that the Government would use railway projects to help cut gluts in steel, cement and other construction materials, and that Beijing would not permit economic growth to sink below 7%. The Chinese gains helped lift markets across Asia, with Japanese stocks rising for a second day following Prime Minister Shinzo Abe’s weekend victory in upper-house elections. That has strengthened Abe’s mandate to push through painful economic reforms to end decades of stagnation, although he will still have to overcome opposition in his party. “People, especially long-onlys, are not overweight in Japan. As long as the markets are stable – the US market is looking good, China is not falling off the cliff – there will be opportunistic buying here and there,” a senior dealer at a foreign brokerage in Tokyo said. There was a lot of interest in bullion as it continued to recover from a 23% drop in the second quarter. Spot gold stood at US$ 1,336 an ounce, having jumped about 3% on Monday in its best performance since June 2012. The rally has pushed bullion further away from a 34-month trough of US$ 1,180.71 plumbed just a month ago. Traders said a theme across markets involved investors taking profits and unwinding bearish positions in a number of assets that had fallen sharply in the past few months. Consistent with that, there has been a rebound in the yen and even the Australian dollar, which in turn pushed the US dollar broadly lower. The dollar index, which tracks the greenback’s performance against a basket of major currencies, wallowed at one-month lows following a 0.5% fall on Monday. The euro traded at US$ 1.3200, having topped out at a one-month high around US$ 1.3218 overnight. Against the yen, the dollar was pinned below 100, down from Monday’s high of 101.05. The Australian dollar advanced 0.4% to a near one-week high of US$ 0.9286, pulling further away from a three-year low of $0.8998 set earlier in the month. Commodity prices were mixed. Copper held above US$ 7,000 a tonne after Monday’s 1.7% rally, while US crude was under pressure, trading around US$ 107 a barrel, as investors booked profits after it had hit 16-month high of US$ 109.32 on Friday.