Asian stocks ended broadly higher on Monday amid continued optimism over results from an EU summit where European leaders agreed on a 120-billion-euro growth pact and unveiled short-term measures to help Spain and Italy. The leaders also agreed to allow bailout funds to recapitalize banks directly, sparking a relief rally in commodities and equities on Friday.
Bullish sentiment carried into the new trading week across Asia, but there was some amount of caution after official figures showed China's manufacturing activity fell to a seven-month low in June. The official manufacturing Purchasing Managers' Index as well as the final results of a survey by Markit Economics and HSBC showed declines in new orders and export demand, signaling that the world's second-largest economy hasn't bottomed out.
Copper and crude were on the downswing following Friday's rally and the euro stayed weaker against the dollar after data showed manufacturing activity across the 17-nation euro zone remained unchanged in June from the previous month, signaling the extension of the downturn in the manufacturing sector to an eleventh successive month.
Japanese shares ended marginally lower, as traders locked in gains after a brief short-covering rally in the morning. Export-related shares lost ground on profit taking, while commodity-linked companies saw their shares rising after commodity markets posted their biggest rally for the year on Friday on optimism over the European pact. The Nikkei average slid 0.04 percent, while the broader Topix index shed 0.1 percent.
Among exporters, Canon edged down 0.3 percent, Fanuc fell 0.9 percent, Honda Motor eased 0.7 percent and Toyota Motor ended half a percent lower. Commodity-linked Misui & Co and Inpex gained about half a percent each, while shipping line Nippon Yusen advanced 2.4 percent. Daiwa Securities Group fell 1.7 percent after Kawasaki Heavy Industries dropped the brokerage as one of its two lead underwriters for its upcoming issuance of domestic straight bonds.
Meanwhile, the Bank of Japan's closely-watched quarterly "tankan" business-sentiment survey, released just before the market open, showed that large Japanese companies were less pessimistic about business conditions in the three months to June and expect conditions to improve over the next three months.
Chinese shares ended little changed, with the benchmark Shanghai Composite index rising just 0.03 percent after data showed the nation's manufacturing activity deteriorated at a faster clip in June than a month earlier, as sagging demand abroad took a toll on new-order bookings and employment. Hong Kong was closed for a public holiday.
The HSBC/Markit China manufacturing PMI index slipped to 48.2 in June from 48.4 points in May, while the official PMI slipped to 50.2 points from 50.4 points, with new orders falling the most in seven months.
Australian shares posted solid gains, though momentum waned somewhat going into the close. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index gained about 0.9 percent each. Energy and resource stocks led the gainers as positive news from EU summit brought a relief rally in commodities on Friday. Miner BHP Billiton rose 0.9 percent, gold miner Newcrest jumped 4.1 percent and oil & gas producer Woodside added 2.6 percent.
Financials also saw significant gains, with ANZ, Westpac and Macquarie Group rallying 2-3 percent. Shares of Lend Lease soared 4.3 percent after the developer upgraded its expected earnings range for the just-concluded fiscal year. Upmarket department store David Jones plunged over 10 percent after U.K.- based EB Private Equity withdrew its $1.65 billion takeover approach for the department store chain.
In economic news, an indicator of monthly inflation in Australia increased 1.6 percent in the 12 months to June from a 1.8 percent rise in May, marking its lowest rate of increase since September 2009, a survey showed.
South Korea's Kospi average slipped 0.1 percent, erasing an early gain amid waning EU euphoria and concerns over downbeat domestic economic data. Heavyweight Samsung Electronics fell 2.3 percent after Apple Inc. won a court ruling blocking sales of the Galaxy Nexus smartphone in the U.S. Battered crude refiners gained ground on bargain hunting after U.S. crude jumped by more than $7 a barrel on Friday, marking its biggest one-day gain since March 2009. SK Innovation and S-Oil both rose about 2.5 percent each.
South Korea's manufacturing sector contracted for the first time in five months in June, Markit Economics reported. The Purchasing Managers' Index for manufacturing fell to 49.4 in June from 51 in the previous month, with weaker domestic and international demand contributing to the lower output.
New Zealand shares rose sharply, mirroring extremely positive cues from overseas markets Friday, after EU leaders agreed to recapitalize the region's troubled banks. Heavyweights Telecom and Fletcher Building paced the advances, climbing 2.5 percent and 3.2 percent, respectively. Fletcher Building, the nation's largest construction company, on Friday announced the closing of a laminate manufacturing plant in Spain and consolidating production at one plant, as it copes with residential demand in the struggling country.
Carpet maker Cavalier, led the gainers on the exchange, climbing 4.6 percent, while retailers lost ground, with Michael Hill and Pumpkin Patch falling 2-3 percent. Courier and data management firm Freightways gained 0.8 percent after it bought printing and data management firm Dataprint NZ for up to $6.5 million.
Elsewhere, India's benchmark Sensex was last trading marginally higher, Indonesia's Jakarta Composite index was gaining 0.9 percent, Malaysia's KLSE Composite edged up 0.1 percent, Singapore's Straits Times index was up 1.1 percent and the Taiwan Weighted average rose 0.7 percent.
On Wall Street, stocks rallied on Friday after EU Leaders agreed to make use of Eurozone's bailout funds to recapitalize the region's banks directly once an effective single supervisory mechanism is established, relieving the governments of the burden of bailing out troubled lenders.
Traders, meanwhile, largely shrugged off a mixed batch of U.S. economic data, including a report from Thomson Reuters and the University of Michigan showing that consumer sentiment deteriorated by more than previously estimated in the month of June. The Dow jumped 2.2 percent, the tech-heavy Nasdaq soared 3 percent and the S&P 500 surged up 2.5 percent.
by RTT Staff Writer
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