Asian stock markets rise after housing, factory data shows the US economy is strengthening

BANGKOK – Asian stock markets staged a modest recovery Wednesday, boosted by strong data releases that portray a U.S. economy on the upswing.

New home sales, bigger factory orders and rising consumer confidence helped allay fears about state of the U.S. economy, the world’s biggest. The data came on the heels of comments by China’s central bank that eased fears of a credit crunch in the world’s No. 2 economy. Developments in both countries helped boost appetite for stocks, analysts said.

“The firmer data came alongside soothing comments from China’s central bank about liquidity conditions in the banking sector,” Mitul Kotecha at Credit Agricole CIB in Hong Kong said in a commentary.

China’s central bank caused a global rout in markets on Monday when it moved to curb so-called shadow banking — unregulated lending to companies starved of credit by traditional banks. Investors worried that would cause an increase in borrowing rates for companies, hurting business. On Tuesday, the central bank issued a statement saying it would act to keep credit markets functioning, if needed.

Mainland Chinese shares were mixed after enduring sharp losses earlier this week. China allowed interbank lending rates to soar overnight Thursday, an attempt by Beijing to clamp down on massive credit flows in the informal lending industry. Small- and medium-sized businesses that have largely been denied access to formal lending channels from the country’s major banks often turn to off-the-books lenders for needed cash. But that has provoked fears of potentially destabilizing credit bubble.

The Shanghai Composite Index fell 1.2 per cent to 1,937.17. The Shenzhen Composite Index rose 1 per cent to 889.01. In Hong Kong, the Hang Seng gained 0.8 per cent to 20,022.30. Japan’s Nikkei 225 fell 0.9 per cent to 12,904.01. South Korea’s Kospi dropped 0.1 per cent to 1,778.26. Australia’s S&P/ASX 200 gained 1.3 per cent to 4,714.40.

Analysts said they had confidence that the world’s No. 2 economy would be able to continue growing, albeit at a slower pace.

“Overall, we believe that markets need not panic that China is about to experience a hard landing … Beijing has enough time and resources to stimulate the economy and is unlikely to accept missing” its 7.5 per cent growth forecast for 2013, Credit Agricole said.

Wall Street stocks closed higher after reports showed sales of durable goods rose 3.6 per cent last month while house prices jumped 12.1 per cent in April. A separate report showed sales of new homes accelerated in May to their fastest pace in five years, with sales rising 2.1 per cent. Consumer confidence also increased.

The Dow Jones industrial average rose 0.7 per cent, to close at 14,760.31. The Standard & Poor’s 500 index rose 1 per cent, to 1,588.03. The Nasdaq composite rose 0.8 per cent to 3,347.89.

The data underscores the message last week from the Federal Reserve, which plans to slow its bond-buying program this year and end it next year, if the economy continues to strengthen. The Fed’s bond purchases have helped keep long-term interest rates low.

Benchmark oil for August delivery was down 60 cents to $94.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 14 cents to end at $95.32 a barrel on Tuesday.

In currencies, the euro fell to $1.3077 from $1.3090 late Tuesday in New York. The dollar slipped to 97.73 yen from 97.75 yen.