Asian data boosts stocks

WORLD stocks started the month on a brighter note yesterday as data showed a manufacturing rebound in China and stronger-than-expected growth in Australia, while the yen held near recent 15-year peaks against the dollar.

China's manufacturing sector staged a moderate rebound in August after slowing for several months, while Australia's economy grew at the fastest pace in three years last quarter.

The strong readings from Asia helped offset concerns that the US economy is slowing to an extent that would force the Federal Reserve to consider easing policy again.

"People are fixated on only two economies in the world: China and the US. It becomes a risk-on day if you get good Chinese data and a risk-off day if you get bad US data," said Marc Ostwald, a strategist at Monument Securities in London. The MSCI world equity index rose 0.8 per cent, moving further away from a seven-week low hit last week. The benchmark index is still down nearly seven per cent since January.

The Thomson Reuters global stock index rose 0.9 per cent.

In Europe, the FTSEurofirst 300 index jumped 1.2 per cent, led by mining shares such as Anglo American. US stock futures rose around 1.2 per cent, pointing to a firmer open on Wall Street later.

Emerging stocks added 0.8 per cent while US crude oil rose 0.7 per cent to US$72.46 a barrel. German government bond futures fell 66 ticks.

The low-yielding dollar, which still tends to suffer when investors buy into riskier assets and currencies, lost 0.8 per cent against a basket of major currencies.

The weaker outlook for the US economy itself is also weighing on the dollar, with minutes of the Fed's Aug 10 meeting showing the central bank would consider additional easing steps if the outlook weakened "appreciably ".

The meeting was held against a darkening backdrop, and the Fed, in a significant policy shift, decided to reinvest maturing mortgage-related securities in government debt so its support for the stumbling recovery did not fade. Reuters