ASIA MARKETS: Asia Stocks Pare Gains After China Trade Data

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Asian markets rose Wednesday after an improved economic outlook clinched a fourth day of improvement for U.S. equities, although gains narrowed after Chinese data showed exports unexpectedly declined.

Australia's S&P/ASX 200 rose 0.9%, Hong Kong's Hang Seng Index added 0.3%, and the Shanghai Composite was up 0.2%, with each paring early gains after the Chinese trade data fell short of estimates.

China reported a 3.1% year-on-year drop in June exports and a 0.7% contraction in imports, against expectations of an increase in both. The data added to worries about the nation's economic outlook.

Japan's Nikkei Stock Average rose 0.1%, but South Korea's Kospi eased 0.2%, reflecting caution ahead of Thursday's monetary policy decisions in both countries. The two benchmarks were also subject to choppy trading after rising on Tuesday, with the Nikkei Average, having ended at a six-week high.

U.S. stocks extended their rally Tuesday on an improving economic outlook, pushing the Standard & Poor's 500 Index (SPX) closer toward its all-time high, with commodity prices also booking gains overnight.

"What is fueling the optimism is the confession session of the last six weeks ... which has seen massive earnings downgrades," said IG Markets strategist Evan Lucas. "We know from the data dumps out of the U.S. over the last three months that earnings aren't going to be low."

Gains for Chinese banks underpinned the advance in Hong Kong, while the property sector supported the mainland Chinese stock markets.

The Hong Kong-traded shares of China Construction Bank Corp. (CICHY) and Industrial & Commercial Bank of China Ltd. (IDCBY) rose 1.3% and 1.1%, respectively, while Poly Real Estate Group Co. advanced 1.1% in Shanghai.

Several energy shares gained as U.S. benchmark oil prices ended at their best level in 14 months. Following those gains, Australia's Origin Energy Ltd. (ORG.AU) climbed 1.4%, and Woodside Petroleum Ltd. (WOPEY) rose 0.5% in Sydney, while PetroChina Co. (PTR) added 0.5% in Hong Kong.

Australian miners rose after aluminum producer Alcoa Inc. (AA) played down concerns about a slowdown in China, and as gold prices rose for a second day.

BHP Billiton Ltd. (BHP) rose 1.4%, Rio Tinto Ltd. (RIO) gained 1.3%, and Alumina Ltd. (AWC) rallied 3.6%.

In Tokyo, meanwhile, some technology shares retreated after recent advances, with Trend Micro Inc. (TMICY) losing 1.8%, and Toshiba Corp. (TOSYY) shedding 1.4%.

Gains for consumer and retail stocks supported the market, however, with Suntory Beverage & Food Ltd. rising 2.4%, and Asahi Group Holdings Ltd. (ASBRY) climbing 1.8%.

Shares of retailer Aeon Co. (AONNY) gained 1.6% after reporting an increase in its quarterly profits.

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