GLOBAL MARKETS-Shares rise on encouraging China, U.S. factory data

Last Updated: Thu, Nov 22, 2012 06:20 hrs

* MSCI Asia ex-Japan at one-week high, Nikkei at 6-month high

* China HSBC flash PMI above 50 for first time in 13 months

* Yen hits multi-month low vs dollar, euro on stimulus view

* Activity slowing before U.S. Thanksgiving long weekend

* European shares likely extend gains

By Chikako Mogi

TOKYO, Nov 22 (Reuters) - Asian shares rose on Thursday and European equities were expected to follow as solid manufacturing surveys in the United States and China fed optimism that the global growth slowdown may have turned a corner, while the euro was underpinned by hopes for aid for Greece.

The euro rebounded to a two-week high against the dollar of $1.28685. German Chancellor Angela Merkel revived hopes by saying an agreement to release emergency aid to Greece was still possible next Monday when euro ministers meet, after Athens' international lenders failed to reach a deal on Wednesday.

Trading volume was thinning ahead of the U.S. Thanksgiving weekend, but European shares were seen extending gains, with financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to track Asian strength and open as much as 0.6 percent higher.

MSCI's broadest index of Asia-Pacific shares outside Japan built on early increases to rise 0.8 percent to a 1-1/2-week high, for a four-day winning streak.

Regional equities markets had already been buoyed by recovering risk appetite on easing tension in the Middle East and hopes that a Greece bailout will be agreed next week.

Resources-sensitive Australian shares surged 1 percent to their highest close in 10 days as miners climbed. London copper rose 0.5 percent to $7,730.50 a tonne and spot gold inched up 0.1 percent to $1,730.89 an ounce.

South Korean shares rose 0.8 percent, pulled higher as shares in Samsung Electronics Co Ltd scaled a new lifetime high of 1.419 million won ($1,300) on expectations for strong profit growth in its mobile business.

The China HSBC flash Manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, indicating factory activity was picking up and pointing to reviving economic growth after seven consecutive quarters of slowing. A sub-index measuring output rose to 51.3, also the highest since October 2011.

"The data suggests the China's growth had hit a bottom in the third quarter and prospects are brightening for small and medium-sized firms in China," said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory.

While the report was positive, the rise in prices of base metals, of which China is the world's top consumer, will be contained given the high level of Chinese inventories, he said.

"But shares get a boost because they are driven by sentiment and because contained base metal prices under an improving economy will help companies boost their earnings," Niimura said.

He added that as hedge funds close their books this month and next, any swing in prices should be seen as more related to their position adjustments than a change in real risk appetite.

Chinese data followed an overnight report showing U.S. manufacturing grew in November at its quickest pace in five months. A rise in domestic demand hinted that factories could provide a boost to economic growth in the fourth quarter.

"With U.S. markets closed tonight for the Thanksgiving holiday, investors' focus will be squarely on French, German and composite-European manufacturing PMIs and the kick-off of yet another EU summit," said Cameron Peacock, market strategist at IG in Melbourne.


Japan's Nikkei stock average jumped 1.6 percent to a 6-1/2-month closing high as exporters were lifted by hopes the weakening yen would boost their earnings. Japanese financial markets will be closed on Friday for a public holiday.

The yen has come under pressure since the Japanese government announced a Dec. 16 election last week.

The opposition Liberal Democratic Party, which is tipped to win, on Wednesday promised a big extra budget and a policy accord with the Bank of Japan on aggressive monetary stimulus to prevent the economy from sliding into recession.

The yen fell to a 7-1/2-month low versus the dollar of 82.59 on Thursday, while the Japanese currency also hit a 6-1/2-month low of 106.26 yen against the euro.

"Yen, I think, is being driven by anticipation of LDP led government forcing aggressive monetary easing," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

Japanese government bonds slipped, weighed by the the jump in equities, pushing 10-year yields up 1 basis point to 0.740 percent.

Rallying stock markets boosted sentiment in Asian credit markets, tightening the spreads on the iTraxx Asia ex-Japan investment-grade index by 3 basis points.

A ceasefire between Israel and Gaza's Hamas rulers took hold on Thursday after eight days of conflict, easing concerns about supply from oil-producing Middle East.

Oil inched higher, with U.S. crude up 0.2 percent to $87.59 a barrel and Brent also up 0.2 percent to $111.06.

More from Sify: