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Asian markets rally on good news in US, China

Asian markets rallied yesterday as investors were heartened by Wall Street's advance last week and by reports downplaying the impact of disastrous winter storms on China's broader economy.

Investors also snapped up shares of major miners Rio Tinto and Aluminum Corp of China (中國鋁業) on Friday's news that the Chinese company and Alcoa Inc had bought a big stake Rio Tinto, listed in both Sydney and London.

China's benchmark Shanghai Composite Index surged 350.85 points, or 8.1 percent, to 4,671.62. The Shenzhen Composite Index of China's second, smaller market soared 7.9 percent to 1,375.73.

Hong Kong's Hang Seng index jumped 3.8 percent to 25,032.08 and Japan's Nikkei 225 index rose 2.7 percent to close at 13,859.70 points. Markets in South Korea and India also rose strongly.

Last week's rally on Wall Street -- which put in its best five-day gain since March 2003 -- boosted sentiment in Asia, where markets have tumbled since the start of the year on worries about a US recession.

Investors in China and Hong Kong bid up stocks after China's state-run newspapers carried front-page statements by top economic officials downplaying the likely impact of the winter storms that have gripped southern China with its worst snowfalls in 50 years.

"There's no need to worry. The losses will be recovered and investors should not worry," the China News Service quoted Li Rongrong (李榮融), chairman of the agency in charge of big state corporations, as saying.

So far, official estimates put the damage from the storms at US$7.5 billion. Last week, the government ordered banks in regions affected by the storms to relax limits on lending, also reassuring investors worried over inflation-fighting credit tightening policies.

Aluminum Corp, or Chinalco, surged by the daily 10 percent limit to 32.34 yuan after announcing late on Friday that is has acquired, along with US partner Alcoa Inc, a 12 percent stake in Rio Tinto PLC.

The news comes just days ahead of tomorrow's deadline set by British regulators for BHP Billiton to formalize its US$130 billion proposal to merge with Rio Tinto, a deal that would create a monolithic mining company and that Chinese officials have previously expressed concerns about.

In Sydney, Rio Tinto Ltd closed less than 1 percent higher at A$128.11, while BHP Billiton ended 2 percent higher at A$39.32.

The Chinese market was further boosted by news that the China Securities Regulatory Commission had approved two new stock funds -- raising the likelihood of fresh flows of cash into the markets.

CCB Principal Asset Management Co and China Southern Fund Management Co (南方管理基金) are due to raise a total of about 14 billion yuan (US$1.95 billion) later this month, the Xinhua news agency reported.

In New York on Friday, the Dow Jones industrial average gained 0.7 percent. Both the Dow and the Standard & Poor's 500 index rose more than 4 percent for the week.

US stock index futures were flat or up slightly. Dow futures were up 2 points to 12,758, while S&P 500 futures were barely changed.
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