ASIA MARKETS: China Stocks Slip After Data; Japan Extends Rally

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Chinese stocks fell on Thursday after data showing consumer prices rose more than expected, while most other Asian markets advanced after U.S. and German equities climbed further into record territory.

The Shanghai Composite dropped 0.4%, and Hong Kong's Hang Seng Index slipped 0.2% in choppy trading, after official data showed from the year-earlier period, driven by food prices. The producer price index, which measures wholesale prices, dropped a sharper-than-expected 2.6%.

Bank of America Merrill Lynch China economist Ting Lu said that although consumer prices quickened, a steeper fall in wholesale prices during the month were likely to limit market reaction.

"Inflation pressure is quite low, and the room remains big for the new government to maintain relatively accommodative monetary and fiscal policies. However, we expect no additional stimulus, as growth could naturally recover a bit, and policy makers can tolerate a lower growth," Lu said.

Meanwhile, the Nikkei Stock Average rose 0.7% in Tokyo, after ending Wednesday at its best level since June 2008. The gains were aided by an improved earnings outlook, after Toyota Motor Corp. reported robust results for the quarter ended March 31.

The Kospi added 0.8% after a surprise interest-rate cut by the Bank of Korea.

The S&P/ASX 200 , which on Wednesday also ended at the highest level since June 2008, was marginally higher in volatile Sydney trade, after data showing the Australian economy added substantially more jobs than expected in April.

The strong employment data raised doubts the central bank would lower interest rates further after trimming the benchmark cash rate Tuesday.

Asia's stock moves came after the Dow Jones Industrial Average (DJI) and the Standard & Poor's 500 Index (SPX)both ended at record highs in the U.S. on Wednesday, while the German benchmark index also finished at an all-time peak.

Major movers

Chinese property developers fell after the inflation data. Gemdale Corp. lost 2.8% in Shanghai, China Vanke Co. retreated 1.1% in Shenzhen, and China Overseas Land & Investment Ltd. (CAOVY) shed 1% in Hong Kong.

The "key for CPI is that it is still below the government target for the year. The question is whether this is a reflection of a wider slowing of the economy," said Kim Eng Securities director of sales trading Andrew Sullivan.

In Tokyo, shares of Toyota (TM) rose 1.4% after its profit more than doubled in the quarter ended March 31 on the back of strong sales in the U.S. and a weakened yen.

Other exporters climbed on upbeat overseas cues, with Fanuc Corp. (FANUY) rising 2%, and Casio Computer Co. (CSIOY) adding 4.1%.

But shares of Toshiba Corp. (TOSYY) dropped 3.5% after its profit growth fell short of expectations.

Resona Holdings Inc. (8308.TO) added 1.7% after the Nikkei reported the financial-services firm planned in five years to repay the public funds it owes the government.

Daikin Industries Ltd. (DKILY) soared 7.3% after the company posted an increase in annual profit.

In Seoul, banks were climbing after the Bank of Korea's interest-rate cut by a quarter-point to 2.5%, where most economists had expected no change.

Shares of KB Financial Group Inc. (KB) rose 2.8%, and Shinhan Financial Group Co. (SHG) gained 3.1%.

In Sydney, shares of retailers edged up after the local economy added as many as 50,100 jobs in April, trouncing expectations for an addition of 12,000 jobs. The data came after 36,000 jobs were lost in March.

Shares of Woolworths Ltd. (WOLWF) rose 0.6%, and Harvey Norman Holdings Ltd. inched up 0.4%.

"Looking through the noise, it does appear that employment has improved since the beginning of this year," HSBC's Australia and New Zealand chief economist Paul Bloxham wrote to clients in a report.

"The labor-force data are providing some evidence that the soft patch in growth may be behind us. Recent indicators also suggest that [first-quarter gross domestic product] is likely to be strong. The Reserve Bank of Australia may not need to ease any further," Bloxham said.

 
   Advancers also included News Corp.   (NWS), shares of which climbed 3.3%. 
 

The media conglomerate posted fiscal-third-quarter earnings excluding items of 36 cents a share, beating analyst expectations by 1 cent a share. Revenue totaled $9.54 billion, ahead of projections of $9.14 billion. News Corp. is the owner of MarketWatch, the publisher of this report.

Also on the Australian market, Billabong International Ltd. (BBG.AU) has requested its shares be suspended from quotation, pending an announcement related to transactions affecting the surfwear retailer, which has been in takeover talks.

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