World Economy

Asian Shares Pare Losses as China Markets Rally

Asian Shares Pare Losses as China Markets RallyAsian Shares Pare Losses as China Markets Rally

Asian shares pared earlier steep losses on Monday after Chinese markets rallied as investors focused on some of the bright spots in separate surveys of Chinese factory activity.

Financial spreadbetters expected a brighter start to European trading, with Britain’s FTSE 100 seen opening as much as 0.5 percent higher, Germany’s DAX 0.4 percent, and France’s CAC 40 up 0.5 percent, Reuters reported.

Persistent fears about Greece’s financial situation is likely to limit gains, and last week’s downbeat US data is seen making investors wary.

MSCI’s broadest index of Asia-Pacific shares outside Japan was nearly flat in late afternoon trading, after early dropping to its lowest intraday level since April 7.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen as well as the Shanghai Composite Index were both surging more than 4 percent as market participants took stock of the surveys as well as domestic media commentary asserting the bull market has not yet ended.

Major state-backed newspapers carried front-page articles saying despite the tumble on Thursday, when main indexes shed more than 6 percent, the foundations of the bull market remain unchanged.

 PMI Slumps

China’s official manufacturing Purchasing Managers’ Index (PMI) edged up to 50.2 from April’s 50.1, matching the expectations of economists polled by Reuters, but also suggested Beijing might have to take additional steps to spur growth.

The final HSBC/Markit PMI was also released and showed a reading of 49.2 in May, shrinking for a third straight month and below the 50-point level that separates an expansion from a contraction in activity on a monthly basis. The private survey showed export orders contracted at the sharpest rate in nearly two years.

“The PMI figures, both the official one and the HSBC one, were very close to the consensus view and they can be interpreted as a further normalization in the economy,” Gerry Alfonso, director of Shenwan Hongyuan Securities Co, wrote in a note.

A separate official survey of China’s non-manufacturing PMI edged down to 53.2, compared to April’s 53.4, showing that growth in the country’s services industry cooled last month.

Japanese PMI, meanwhile, showed an improvement. The Markit/JMMA final Japan Manufacturing PMI rose to a seasonally adjusted 50.9 in May, unchanged from the preliminary reading but higher than a final 49.9 in April.

Japan’s Nikkei stock index eked out a tiny gain to give it a 12th straight gaining session, its longest streak sense 1988.