Asian stocks rise as China looks to boost bank lending

BEIJING - Asian markets were higher Tuesday as Chinese moves to boost bank lending helped offset weak factory data, while shares in Japan fell on lower consumer spending.

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KEEPING SCORE: The Shanghai Composite Index rose 0.4 per cent to 2,698.89. Hong Kong's Hang Seng added 0.8 per cent to 19,256.63. Sydney's S&P ASX 200 gained 0.1 per cent to 4,886.00 and Taiwan, Jakarta and New Zealand also advanced. Tokyo's Nikkei 225 shed 0.2 per cent to 15,991.41 and Singapore and Malaysia also retreated. Korean markets were closed for a holiday.

CHINA LENDING: In a move to shore up slowing economic growth, Beijing freed more money for lending by lowering the amount commercial lenders must hold in reserve. The change reduced required reserves by 0.5 per cent points effective Tuesday, which will release several hundred billion yuan (tens of billions of dollars) into the market. Chinese traders are heavily influenced by the availability of credit to finance trading, so an uptick in lending often leads to a rise in share prices.

CHINESE MANUFACTURING: A survey showed Chinese factory activity in February fell to its lowest level in five months. Employment shrank at its fastest rate since the start of 2009 in the aftermath of the global crisis. "The economy's road to stability remains bumpy," said He Fan, the magazine's chief economist, in a report. "The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff."

JAPANESE SPENDING DIPS: The government reported consumer spending fell 3.1 per cent in January from a year earlier following December's 4.4 per cent decline. That was despite a slight improvement in employment. "Today's figures suggest that private consumption continued to fall in Q1," said Marcel Thieliant of Capital Economics in a report.

ANALYST'S TAKE: "Positive Chinese sentiments would be extended partially to the rest of Asia," said Bernard Aw of IG in a report. "However, with the mixed and weak leads from overnight markets, any positivity may be restrained. Australia and Japan have already started off on a cagey note."

WALL STREET: Stocks fell, erasing nearly all the market's gains for the month, after health care stocks declined on weak earnings and lower natural gas prices pushed down energy shares. Investors lost enthusiasm for stocks after two straight weekly gains. The Dow Jones industrial average lost 123.47 points, or 0.7 per cent, to 16,516.50. The Standard & Poor's 500 index fell 15.82 points, or 0.8 per cent, to 1,932.23. That pushed the S&P 500 to its third monthly loss. The Nasdaq composite index retreated 32.52 points, or 0.7 per cent, to 4,557.95.

ENERGY: Benchmark U.S. crude declined 9 cents per barrel to $33.66 in electronic trading on the New York Mercantile Exchange. The contract added 97 cents on Monday to close at $33.75. Brent crude, used to price international oils, shed 20 cents to $36.37 in London. It jumped $1.13 on Monday to $36.57.

CURRENCY: The dollar declined to 112.38 yen from Monday's 112.49 yen. The euro edged up to $1.0883 from $1.0880.


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