Asia stocks rise on China stimulus hopes

BANGKOK (AP) ? Asian stock markets rose Thursday after China's inflation rate eased, adding to hopes that Beijing will do more to stimulate the world's No. 2 economy.

China said its consumer price index rose 1.8 percent in July, down from the previous month's 2.2 percent and well below last year's highs. Lower inflation gives Beijing more room to cut interest rates or take other steps to shore up economic growth that has slowed sharply this year, analysts said.

China has "more scope to ease if they want to but I expect that they will prefer to take a wait and see attitude," Andrew Sullivan of Piper Jaffray in Hong Kong said in a market analysis.

Inflation is politically dangerous for China's leaders, since rising prices for food and other necessities carries the potential for unrest among tens of millions of poor families that spend up to half their incomes on food. Inflation also erodes economic gains that help underpin the Communist Party's claim to power.

Jackson Wong, vice president at Tanrich Securities, said that while the inflation data raises the likelihood of stimulus measures, it also raised fears that deflation ? falling prices, which undermine company earnings ? could take hold, causing manufacturers to delay orders and consumers to put off shopping.

"Deflation is really bad for the market because everyone would postpone purchases because prices are getting cheaper. That would significantly derail the economy," he said.

Japan's Nikkei 225 index rose 1.1 percent to 8,975.27. Earlier in the session, it surpassed the 9,000 level for the first time since July 6.

South Korea's Kospi jumped 2 percent to 1,940.15 after the central bank announced it was keeping its key interest rate unchanged, a decision that met analyst expectations. Hong Kong's Hang Seng added 0.8 percent to 20,230.87. Australia's S&P ASX/200 rose 0.3 percent to 4,324.20. Benchmarks in Taiwan, Indonesia and mainland China also gained.

Among individual stocks, Japan's Nikon tumbled 8.1 percent after the company revised its operating profit outlook down for the business year ending March, Kyodo News agency said.

Steelmakers posted solid gains. Japan's JFE Holdings rose 4.2 percent and Nippon Steel added 2.5 percent. South Korea's POSCO gained 3.1 percent.

European stocks fell Wednesday amid a raft of negative economic news signaling a deepening slowdown in the region. The Bank of England cut its growth and inflation forecasts, confirming many economists' expectations that it will provide more monetary stimulus later this year.

In the U.S., stock markets were mixed after several big consumer goods companies warned that weak demand in Europe was cutting into their revenue. The Dow Jones industrial average finished up 0.1 percent at 13,175.64. The Standard & Poor's 500 added 0.1 percent to 1,402.22. The Nasdaq closed down 0.2 percent at 3,011.25.

Benchmark crude for September delivery was up 22 cents to $93.57 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 32 cents to finish at $93.35 per barrel in New York on Wednesday.

The euro rose to $1.2380 from $1.2356 late Wednesday in New York. The dollar fell to 78.46 yen from 78.52 yen.

Source: http://news.yahoo.com/asia-stocks-rise-china-stimulus-hopes-052000892--finance.html

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