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GLOBAL MARKETS-Asia stocks near 6-wk highs, eye China data

Published 03/09/2010, 11:06 PM
Updated 03/09/2010, 11:08 PM

* Asian shrs stick close to 6-wk highs after China trade data

* Euro under pressure after Fitch comments

* Pound struggles as rating concerns niggle

* Oil falls for second day as U.S. crude stockpiles jump

By Umesh Desai

HONG KONG, March 10 (Reuters) - Asian stocks hovered near six-week highs on Wednesday as Chinese data showed exports and imports in February were better than expected, while the euro and the pound suffered on renewed concerns about Europe's fiscal problems.

Foreign buying, which has been one of the key drivers of stock markets in South Korea, Japan and India, continued unabated in the region with data showing emerging market equity funds posted a third straight week of inflows.

"Foreign investors were risk-averse in January and February due to worries about major uncertainties like Greece's sovereign debt problems and China's (policy) tightening moves," said Seoul-based Lee Sun-yub, a market analyst at Shinhan Investment Corporation.

"But those have eased significantly and thus foreign buying has made a strong return. We are seeing money flow not only into South Korea but markets around the region," he said.

The MSCI index of Asian shares outside Japan were up 0.2 percent after rising as much as 0.3 percent to a fresh six-week high.

Gains were retained after data released in Beijing showed China's imports and exports last month were better than expected.

But Shanghai's main index was down 0.5 percent, little changed after the data, with economists wary of reading too much in the way of policy implications into the figures because of the timing of the Lunar New Year holiday and a low base of comparison in 2009.

"The trend remains positive for risky assets and gains will continue throughout March," said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd in Hong Kong.

"There is still some life left in the equity market rally," he said but added there could be concerns in the second quarter about a double-dip recession as the stimulus packages run out.

The Nikkei stock average was flat, also having hit six-week highs in recent sessions. But recall-hit Toyota Motor Corp fell 1.3 percent after a report that a Prius had sped out of control in the United States.

"Money from overseas has been flowing into the Japanese market since late last year and that's providing solid support," said Hajime Nakajima, deputy general manager at Cosmo Securities.

"But given the global macro situation, including credit worries in Europe, it'll take a while until investors actually place Japan above 'neutral' in their portfolios," Nakajima said.

Those worries have hurt the euro and pound in Asian trade.

The common currency had come under fresh pressure after Fitch ratings agency said it still has a negative outlook on Portugal's credit rating.

That fed concerns that peripheral euro zone economies may face debt problems similar to those of Greece, where a fiscal crisis has led investors to flee the euro in past weeks.

The euro fell to a low of $1.3588, before bouncing back marginally but continues to trade just below $1.36.

The pound was struggling at $1.5000, having been hit by weak data, and fears around its sovereign rating as well as credit ratings of its banks. Sterling has lost more than 7 percent this year on concerns Britain will be stuck with a political deadlock after the May election.

Oil prices eased, extending overnight, after industry data showed a sharp build in U.S. crude inventories.

(Additional reporting by Jungyoun Park in SEOUL and Aiko Hayashi in TOKYO) (Reporting by Umesh Desai)

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