Tokyo stocks shine; Shanghai ends losing streak

Sentiment boosted by WSJ report of Germany’s stance on Greece

By

SarahTurner

V.Phani Kumar

HONG KONG (MarketWatch) — Asian markets rallied Tuesday, with Tokyo shares jumping on optimism the country’s industrial output may have seen its worst, while stocks in Shanghai emerged from an eight-session losing streak on bargain buying across several sectors.

Investors brushed aside some bad news in the region, such as Moody’s review of Japan's ratings for a possible downgrade and weaker-than-expected economic growth data in India. The euro also advanced as risk appetite improved after a report in The Wall Street Journal said Germany was considering not pushing for a rescheduling of Greek bonds.

Japan's Nikkei Stock Average (NI225) finished 2% higher at 9,693.73 after industrial production rose a seasonally adjusted 1% in April, according to government data out Tuesday.

A survey released with the data showed industrial output projected to improve to 8% in May, compared with a previous forecast of 2.7%. Read more on Japan data.

“Industrial production turned around, and that was a positive thing,” said Naomi Fink, strategist at Jefferies Japan. “My fiscal 2011 outlook is for 11,000 [for the Nikkei], mostly because I think in the last two quarters of the fiscal year, recovery will really kick in, and that’s going to support asset markets.”

Royal Bank of Scotland’s Chief Japan economist, Junko Nishioka, said that considering the data alongside other business indicators, “we think the worst is over for business activities after March’s earthquake and the economic activity is likely to normalize gradually.”

Moody’s decision to place Japan’s sovereign-debt ratings on review for a possible downgrade served only to accelerate stock gains in the afternoon, as the yen was weighed by the move. See report on Moody’s review of Japan ratings.

Chinese power utilities traded in Shanghai as well as Hong Kong got a boost from Beijing’s decision to increase power tariffs modestly in several mainland Chinese provinces. The decision is aimed at encouraging the power-generation companies to boost output and ease a severe power shortfall expected on the mainland this summer.

Hyundai Heavy Industries Co. soared 10.8%, also aided by news of order wins to build ships.

In Mumbai, stocks rose after data showed India’s gross domestic product expanded at a slower-than-expected rate of 7.8% in the January-to-March period from the year-earlier quarter, falling short of expectations for an 8.2% increase. The data eased expectations for aggressive interest-rate increases by the central bank.

Nymex July crude-oil futures rose $1.29 to $101.88 a barrel on Globex, while spot gold pared losses and was down 10 cents at $1,539 a troy ounce.

In currency trading, the euro was bolstered after the Journal reported that Germany may drop pushing for rescheduling of Greek debt, a move that could pave the way for Greece to receive a new package of financial aid.

“After what has arguably been a very confusing period for traders in regards to how the Greek saga would play out, it appears we are starting to see some clarity here,” Chris Weston, a currency analyst at IG Markets in Melbourne, wrote in a note to clients.

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