By Daniel Inman
Asian stocks were mostly lower Thursday, as a strong initial
economic indicator for China failed to offset pessimism over its
economy.
The initial October reading for China's manufacturing activity
came out at 50.9, compared to a final reading of 50.2 in September.
The score was a seven-month high, above the 50 mark that separates
expansion and contraction in factory activity.
The preliminary reading was among the first economic data on the
region's largest economy in the third quarter, coming less than a
week after figures showed that Chinese growth picked up from a dip
in the second quarter.
HSBC's flash PMI measure of manufacturing has led to some sharp
market moves this year, as it pointed to a slowdown in factory
activity earlier in the summer before showing signs of improvement
in recent months.
Australia's S&P/ASX 200 added 0.5%, South Korea's Kospi shed
some of its earlier weakness and traded flat.
Thursday's upbeat reading, however, did little to offset fears
over the Chinese economy, as China's interbank lending rate moved
higher for a second day, reviving fears of a liquidity crunch in
June. In addition, data showing a further rise in house prices
earlier in the week increased concerns that Beijing could step in
to cool down the market.
Hong Kong's Hang Seng index dropped 0.9% and the Shanghai Composite lost 0.2%.
Chinese banks recorded substantial losses in Hong Kong, with
China Construction Bank (CICHY) down 1.5%, and Industrial &
Commercial Bank of China (IDCBY) down 1.3%
In currency markets, the Australian dollar (AUDUSD) picked up
slightly after the data were released, last trading at 96.49 U.S.
cents, compared with 96.21 U.S. cents late Wednesday in New
York.
The yen (USDJPY) remained strong and was last trading at
Yen97.21 to the dollar, which weighed on Japanese stocks. The
Nikkei Average fell 0.6%.
The dollar trading below Yen98 put some pressure on exporters in
Tokyo: Kyocera Corp. (KYO) lost 1.5%, and Toyota Motor Corp. (TM)
was 1% lower.
There was also some weakness among companies that produce
industrial machinery in Japan after Caterpillar shares (CAT)
plunged 6.1% overnight as the firm cut its full-year earnings
forecast. This had a knock-on effect on its peers in Japan, where
Hitachi Construction Machinery (HTCMF) lost 2.7%, and Komatsu
(KMTUF) also dropped 3%.
Also in Japan, Hitachi (HIT) jumped 7.7% after the company more
than doubled its net profit outlook for the fiscal half-year ended
Sept. 30, due to strength in areas such as electric-power
systems.
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