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GLOBAL MARKETS-Asian stocks rise on U.S. data, eyes on earnings

Published 07/27/2010, 02:53 AM

* Stocks rise after housing data, FedEx earnings upgrade

* Euro at 2-month highs, eyeing resistances on charts

* Regional corporate earnings awaited, outlook is key

By Umesh Desai

HONG KONG, July 27 (Reuters) - Asian stocks pulled back slightly from two-and-a-half month highs hit earlier on Tuesday after upbeat U.S. housing data, while the euro neared 2-month peaks on relief over stress tests on European banks.

Financial markets are awaiting a slew of data from the United States, including consumer confidence later in the day and second-quarter Q2 gross domestic product, as well as a host of quarterly corporate earnings.

European markets are seen opening largely steady after Deutsche Bank's in-line earnings and UBS's street-beating performance in the second quarter.

The euro was just above a key resistance of 1.30 with sentiment buoyed after the stress tests. Analysts are now eyeing a 2-month high of $1.3029 hit last week as the next test.

High-yielding currencies like the Australian and New Zealand dollars held near recent highs and the dollar stabilised after retreating against the yen on Monday. The pound rose to a 5-month high of $1.5530 as risk appetite improved.

The MSCI index of Asia Pacific ex-Japan stocks was up 0.5 percent, led by gains in the technology and consumer durables sectors.

The index, which hit its highest level since mid-May earlier in the session, is down just 2 percent in the year to date, and could return to the black this week although earnings from Asian corporate heavyweights hold the key to further gains.

"What we are going to get is good earnings numbers and negative forward looking statements for Q3 and especially Q4. Things are not looking so good," said Erwin Sanft, head of China and Hong Kong Research at BNP Paribas Asia.

Japan's benchmark Nikkei ended down 0.1 percent after failing to break above a key resistance level, with support from robust earnings in Japan countered by persistent worries about a strong yen.

The yen was steady around 86.95 yen to a dollar, after rising from Monday's 87.71.

Overnight, Wall Street finished higher after new home sales in June logged a surprising jump and package delivery and business services company FedEx Corp's, an economic bellwether, upgraded its quarterly and full-year earnings forecasts.

Asian corporate reporting season enters its busy phase this week amid expectations of robust results for the April-June reporting period, though the picture in the months ahead is uncertain.

Japanese camera and office equipment maker Canon Inc and South Korea's Samsung SDI Co Ltd, the world's No.2 rechargeable battery maker, both posted strong earnings but the outlook is less than upbeat.

Bucking the overall trend, Shanghai's composite, already the worst performer in Asia this year, edged down 0.4 percent after a report the city's banks are facing rising default risks on loans to real estate developers.

The mood was already jittery after a report the previous day that almost a quarter of China's local government debt is at risk of defaulting.

Shanghai's index is down more than 21 percent in the year to date despite a six-session rising streak which has taken it to month highs.

The Aussie was trading at $0.9015 close to an 11-week peak and the kiwi hovered at $0.7339, not far from a six-month high. (Editing by Kazunori Takada)

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