Asian markets rise as China affirms loose policy

SEOUL: Asian markets shrugged off a lackluster performance on Wall Street to move higher Thursday amid expectations China will maintain loose monetary policy.

There was also an element of catch-up for Asian stocks as the region's markets, up massively from their March lows, have this month lagged gains in developed markets. Oil prices held above $77 a barrel while the dollar fell slightly versus the yen and the euro.

China's benchmark Shanghai Composite Index jumped 57.43 points, or 1.9 percent, to 3,131.21 and Hong Kong's Hang Seng index rose 188.26, or 0.9 percent, to 21,517. Japan's Nikkei 225 stock average, Asia's biggest market, rose 159.59, or 1.5 percent, to 10,537.62.

Most other markets gained, including Seoul's Kospi, which rose 1.4 percent, and India's Sensex, up 0.1 percent. On Friday, markets around the world will be closed for the Christmas holiday though Japan and China will continue to trade.

"What's happening is China yesterday announced they will keep their loose monetary policy, meaning they will keep printing money to prop up the economy," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong.

China's rapid rebound from the global recession has provided an important boost for some Asian and developed economies, underlining its increased economic heft on the world stage.

In a quarterly report Wednesday, the People's Bank of China repeated its commitment to maintain a "relatively relaxed monetary policy" next year.

China, the world's third-biggest economy, slashed interest rates in late 2008 to support its economic stimulus and has kept them low since. The government has promised repeatedly to maintain easy credit, but analysts say that with the economy improving, the central bank might try to head off possible inflation by tightening access to lending with regulatory controls even if it keeps rates low.

On Wednesday, the Dow Jones industrial average rose 1.51, or 0.01 percent, to 10,466.44. The Standard & Poor's 500 index rose 2.57, or 0.2 percent, to 1,120.59, while the Nasdaq composite index gained 16.97, or 0.8 percent, to 2,269.64.

The U.S. stock performance came amid mixed economic data.

The Commerce Department said sales of new homes plunged 11.3 percent in November to their lowest level since March, confounding economists who had forecast an increase.

On the positive side, personal incomes rose 0.4 percent in November — the fastest rate in four months — helped by higher wages. Spending rose 0.5 percent. Both figures, however, fell slightly short of market expectations.

Oil prices extended gains above $77 a barrel in Asia as a larger than expected drop in U.S. crude supplies fueled investor optimism that consumer demand is improving.

Benchmark crude for February delivery was up 54 cents to $77.21 in electronic trading on the New York Mercantile Exchange. The contract rose $2.27 to settle at $76.67 on Wednesday

In currencies, the dollar fell 0.2 percent to 91.40 yen. The euro rose 0.1 percent to $1.4336.