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Published: Monday July 16, 2012 MYT 3:02:00 PM
Updated: Monday July 16, 2012 MYT 3:03:05 PM

Asia markets rise on Wall Street rally


HONG KONG: Asian shares were broadly higher Monday on the back of a strong Wall Street rally, but Chinese stocks slumped after growth in the world's second-largest economy slowed to a three-year low.

Hong Kong's benchmark Hang Seng index was up 0.14 percent to 19,120.26 in afternoon trade, and Sydney closed up 0.56 percent, or 22.9 points, at 4,105.1 with resource stocks leading the way.

But Shanghai was down 1.38 percent to 2,155.65.

Tokyo was closed for a public holiday.

Official data released Friday showed the Chinese economy expanded 7.6 percent in the second quarter year-on-year, its slowest pace for more than three years due to ripples from the eurozone debt crisis and slow US recovery.

Premier Wen Jiabao warned Sunday that while there was "a lot of dynamism and momentum for economic growth", China's "economic rebound is not yet stable and economic hardship may continue for a period of time".

In the depths of the global financial crisis at the start of 2009 China's economy grew at a rate of 6.6 percent.

Beijing's full-year growth target is 7.5 percent.

"Sentiment is severely battered by a string of negative news," Zhang Gang, an analyst at Central China Securities, told Dow Jones Newswires.

"In their latest remarks, neither Premier Wen Jiabao or Vice Premier Li Keqiang has revealed details about how the governments will boost growth."

But elsewhere, stocks were lifted after US markets broke a six-day losing streak following better-than-expected figures from banking giant JP Morgan Chase, which announced a $5 billion second-quarter profit even after accounting for $4.4 billion in trading losses.

The Dow closed up 1.62 percent, or 203.82 points, at 12,777.09, the S&P 500 rose 1.65 percent and the tech-rich Nasdaq 1.48 percent.

Despite the evidence of slowing Chinese growth, Justin Harper, market strategist for IG Markets Singapore, told AFP: "The Chinese GDP data... came better than expected."

JP Morgan's figures, he added, sparked hopes of "a better than expected earnings season across the board for the big banks".

Traders were also looking to US Congressional testimony from Federal Reserve chairman Ben Bernanke on Tuesday and Wednesday for any hint on a third round of quantitative easing, DBS Group Research said in a report.

"As far as the market is concerned, it is a question of 'not if, but when' the Fed will move towards a third round of quantitative easing measures or QE3," the report said.

The US is China's biggest trading partner and on currency markets the dollar advanced against the euro, with the single currency fetching $1.2239 in afternoon Asian trade compared to $1.2248 in New York on Friday.

The euro also slipped against the yen, buying 96.82 yen from 97.08 yen, while the US dollar traded at 79.10 yen from 79.17 yen.

Oil was mixed after Saudi Arabia and the United Arab Emirates opened crude pipelines bypassing the Strait of Hormuz, which Iran has repeatedly threatened to close as it rows with the West over its nuclear programme.

New York's main contract, light sweet crude for August delivery, shed 36 cents to $86.74 a barrel in the afternoon, while Brent North Sea crude for delivery in August gained 17 cents to $102.57.

Gold was worth $1,589.45 an ounce at 0630 GMT, compared with $1,583.22 on Friday. - AFP

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