4 Mar 2009

Asian stocks rally as China to increase spending

10:01 pm on 4 March 2009

Asian stocks rallied on Wednesday on hopes Beijing will step up efforts to support the Chinese economy, helping the entire region.

China's manufacturing downturn showed tentative signs of bottoming out, offering a rare glimmer of hope for the world economy mired in its worst slump in decades and helping to lift stocks in Asia.

Many policymakers and investors have their eyes set on China, hoping the government can reverse cooling growth in the world's fourth-largest economy and spur global demand.

A senior Chinese economic planning official said the government will increase spending in areas such as infrastructure and manufacturing on top of the 4 trillion yuan ($US584.7 billion) stimulus package unveiled in November.

The news sent Shanghai's market up 6.1%, while Hong Kong's Hang Seng index climbed 2.6%, on the back of stronger Chinese industrial, banks and real estate-related stocks.

In Japan, the Nikkei closed up 0.85%, as bargain hunters emerged after the Nikkei's recent fall to within striking distance of 26-year lows, dealers said.

The Tokyo Stock Exchange's benchmark Nikkei-225 gained 61.24 points to end at 7,290.96. The broader Topix index of all first-section shares rose 5.24 points, or 0.72%, to 732.04.

The MSCI index of Asia-Pacific shares outside Japan fought back from a three-month low and was up 1.3%.

In New Zealand, the benchmark index chose to ignore falls on Wall Street to close up 51 points, or 2.1%, at 2469. The market turnover was $59 million.

Top stocks were up. Contact Energy rose 2 cents to $5.51, while Fletcher Building was 11c at $5.26 and Telecom gained 12c to $2.38.

But Australian shares bucked the trend, dropping to the lowest since August 2003 after gross domestic product unexpectedly shrank in the fourth quarter for the first time in eight years amid fears the country is entering a recession.

At the 1615 AEDT close, the benchmark S&P/ASX200 index was 52.8 points, or 1.64%, lower at 3166.4, while the broader All Ordinaries shed 45.5 points, or 1.43%, to 3125.9.