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Asian stocks up despite disappointing China factory data

BEIJING, China – Asian stock markets mostly rose Monday despite disappointing Chinese factory data and last week’s Wall Street decline.

KEEPING SCORE: The Shanghai Composite Index advanced 0.2 per cent to 2,833.48 and Hong Kong’s Hang Seng gained 1.1 per cent to 19,924.00. Tokyo’s Nikkei 225 rose 1.1 per cent to 16,459.75 and Seoul’s Kospi was unchanged at 1,966.16. Sydney’s S&P-ASX 200 advanced 0.5 per cent to 5,353.90 and benchmarks in Taiwan, New Zealand, Singapore and Manila also gained. India’s Sensex declined 0.1 per cent to 23,453.93 and Jakarta also retreated.

CHINESE WEAKNESS: Government data on April factory output were weaker than expected, fueling concern a possible economic rebound supported by government stimulus might be faltering. That was partly offset by strength in real estate sales growth, which accelerated to 44 per cent over a year ago. The data suggest the credit-fueled recovery “cannot be sustained for long,” Citigroup said in a report. Credit growth was weaker than forecast, but “remained very strong,” UBS economists said. They said government policy should stay largely stable, with credit growth “staying accommodative.”

ANALYST’S TAKE: “Weaker than expected data on China’s economy will add to investor nerves in what was already looking like a cautious start to the week,” said Ric Spooner of CMC Markets in a report. Weakness in retail sales, factory output and credit growth “all suggest that we are not about to see a stimulus-led improvement in China’s GDP growth as markets had been hoping earlier in the year,” said Spooner. “The overall trend suggests that China’s growth rate is holding the line at best.”

WALL STREET: A late slump Friday pulled U.S. stocks to their third straight weekly loss. Companies that make clothing, food and household goods dropped on more bad news from retailers, and energy companies fell with the price of oil. Bond prices jumped and yields fell, which hurt bank stocks and prompted suggestions that with investors worried about weak profits and the health of the global economy, the latest rally has run its course. The Dow Jones industrial average gave up 1.1 per cent while the Standard & Poor’s 500 index fell 0.8 per cent. The Nasdaq composite index lost 0.4 per cent. The S&P 500 has fallen 2.2 per cent over the last three weeks, bringing the index back almost to breakeven for the year.

ENERGY: Benchmark U.S. crude gained 62 cents to $46.83 per barrel in electronic trading on the New York Mercantile Exchange. The contract shed 49 cents on Friday to close at $46.21. Brent crude, used to price international oils, added 60 cents to $48.43 per barrel in London. It retreated 25 cents the previous session to $47.83.

CURRENCY: The dollar gained to 108.75 from Friday’s 108.65. The euro edged up, to $1.1312 from $1.1308.