By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Asian stock markets rose Monday after data showed China's economy grew in line with expectations in the second quarter, belying some fears of a sharper slowdown.

The Shanghai Composite fronted the region's stock advances, climbing 1.6% after data from the National Bureau of Statistics put the quarterly gross domestic product growth at 7.5%.

Other economic data released Monday also eased worries, with June retail sales, in particular, rising a better-than-expected 13.3%.

The GDP growth figure -- although weaker than the 7.7% expansion recorded in the first quarter -- matched expectations in separate surveys of economists by Dow Jones Newswires and Reuters.

It also followed a period of intense debate over the growth trajectory, as analysts worried that the Chinese economy may face more headwinds as Beijing refrained from providing additional fiscal or monetary stimulus.

"The deceleration is a result of reduced domestic investment and a weak global environment. Further deceleration is possible if reforms and stimulus measures are delayed," said Moody's Analytics economist Alaistair Chan.

The gains in Shanghai also came after China's Xinhua news service -- which had late last week cited Finance Minister Lou Jiwei as tipping 7% growth for 2013 -- corrected its story over the weekend. The report said the minister had actually indicated the economy would expand 7.5% this year, in line with the government's official target.

Elsewhere, Hong Kong's Hang Seng Index rose 0.4%, while Australia's S&P/ASX 200 and South Korea's Kospi each added 0.3%, with all three of them erasing earlier losses in the wake of the Chinese data.

Japanese markets were closed for a holiday.

"After all the conjecture over the weekend, the latest batch of Chinese economic data was largely in line with economist forecasts," said CommSec economist Savanth Sebastian.

"The good news is that retail sales lifted for the fifth consecutive month, and while not at heady 15%-plus growth rates seen a year ago, it still provides a degree of encouragement," Sebastian said.

Several Chinese banks rallied to lead the rebound in Shanghai. China Citic Bank Corp. (CHCJY) climbed 6.7%, more than tripling its gains before the GDP data were released, while Bank of Communications Co. (BCMXY), or BoCom, rose 2.8%.

Chinese banks also fared well in Hong Kong, with China Construction Bank Corp. (CICHY) rising 1.1%, and BoCom adding 1.2%.

The banking-led advance also followed data released by the People's Bank of China after the market close on Friday showing a slowdown in June in total social financing -- the broadest measure of bank loans and bond issuances -- from the May level.

Meanwhile, China's statistics bureau said Monday that the non-performing loan ratio at the country's commercial banks sat at 1%, up slightly from 0.9% in the first half of 2012 but still relatively low.

Meanwhile, the stock performance in Asia followed a third straight week of gains for U.S. equities, after the Dow Jones Industrial Average (DJI) and the Standard & Poor's 500 Index ended at record highs Friday.

Major miners in Australia erased their losses after the Chinese economic data to aid the market's recovery. BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. were both marginally higher after dropping earlier in the day.

Also supporting the market, the recently battered shares of surfwear maker Billabong International Ltd. (BBG.AU) extended Friday's rebound, climbing a further 6.5%.

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