Asia stocks rise after US Fed stays the course
BANGKOK (AP) — Asian stock markets were mostly higher Thursday on an improvement in China's manufacturing and the U.S. central bank's message that it will keep interest rates at record lows despite signs of improvement in the world's biggest economy.
Federal Reserve Chairman Ben Bernanke said at the end of a two-day policy meeting that the Fed won't alter its aggressive monetary easing — $85 billion in monthly bond purchases to push down borrowing costs — until it is convinced the economy's gains can be sustained.
Fed officials reinforced their plan to keep short-term interest rates at rock-bottom levels at least until unemployment falls to 6.5 percent. The current unemployment rate is 7.7 percent.
"Overall, Bernanke is providing lots of assurances to markets that US monetary policy will stay ultra-accommodative for quite some time," said analysts at DBS Bank Ltd. in Singapore.
Another positive sign for markets came from a survey showing a better-than-expected manufacturing performance by China in March. HSBC's preliminary purchasing managers' index rose to 51.7 from 50.4 in February on a 100-point scale. Analysts were expecting a reading of 50.8.
Japan's Nikkei 225 index surged 1.1 percent to 12,604.22. Benchmarks in Singapore, Indonesia and Taiwan also rose. South Korea's Kospi slipped 0.4 percent to 1,953.20. Australia's S&P/ASX 200 shed 0.1 percent to 4,962.90.
Hong Kong's Hang Seng rose 0.1 percent to 22,281.18, after briefly dipping into negative territory from an apparent sell-off prompted by skepticism about market levels in mainland China the day before. The Shanghai and Shenzhen composite indexes soared 2.8 percent and 2.7 percent respectively Wednesday. Thursday's advance was more modest.
Francis Lun, managing director of Lyncean Holdings in Hong Kong, said the large gains were fueled by rumors from speculators that China's social security fund was preparing to put 100 billion yuan ($15.9 billion) into equity markets.
"Speculators are making up these stories so they can make money from the market. Today they are taking profits," Lun said. "For the past six months, all these rumors proved to be false."
Traders, meanwhile, are still waiting to see how Cyprus will stave off bankruptcy after the country's government rejected a plan to contribute to a bailout package by seizing money from people's bank accounts.
Cyprus needs to come up with 5.8 billion euros ($7.5 billion) on its own in order to secure 10 billion euros in rescue loans from international creditors.
Officials on Wednesday pursued a new bailout strategy that could include a loan from ally Russia in exchange for natural gas leases and selling assets from its most troubled banks. Nearly a third of the deposits in Cyprus' banks are believed to be owned by Russians.
If Cyprus doesn't work out a way to get the money it needs, the banks could fail and fuel financial chaos that could eventually cause the country to leave the euro. That's a scenario European policymakers are fighting to avoid for fear that an exit by one may spell the eventual end of the currency union.
But fears of a revived debt crisis in Europe faded from Wall Street on Wednesday. The Dow rose 0.4 percent to 14,511.73. The Standard & Poor's 500 index rose 0.7 percent to 1,558.71. The Nasdaq composite index rose 0.8 percent to 3,254.19.
Benchmark oil for May delivery was down 28 cents to $93.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract for April rose 80 cents to settle at $92.96 on the Nymex on Wednesday.
In currencies, the euro rose to $1.2945 from $1.2943 late Wednesday in New York. The dollar fell to 95.72 from 95.89 yen.
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