BEIJING/SEOUL (Reuters) – Growth in China and India powered ahead last month, providing welcome support for the global economy at a time of sluggishness in the United States and most of Europe and a faltering in Japan's recovery.
Two surveys of Chinese executives showed broad-based strength in the manufacturing sector of the world's second-largest economy and helped boost Asian shares outside Japan by 1.7 percent.
The official purchasing managers' index (PMI) rose to a six-month high in October of 54.7 from 53.8 in September, easily beating market forecasts of 52.9.
A figure above 50 denotes expansion; a reading below 50 indicates contraction.
The strength of the official PMI was especially striking because the index normally heads down in October, said Yu Song and Helen Qiao, economists at Goldman Sachs.
"The fact that the PMI went up despite this seasonal bias suggests real activity growth was likely to have been exceedingly strong in October," they said in a note.
The survey showed that manufacturers continued to run down stocks last month to meet rising domestic orders, which Ting Lu with Bank of America Merrill Lynch said was a reflection of strength in construction and consumption.
"These readings bode well for a recovery of output in coming months," Lu told clients.
A companion PMI produced by Markit for HSBC painted a similar picture, rising to 54.8 from 52.9 -- one of the largest month-on-month rises in the history of the survey.
Calling the official PMI one of the best leading indicators of the economy, Lu said the October report supported his forecast of 9.3 percent year-on-year growth in gross domestic product in the fourth quarter and 10.3 percent for all of 2010.
In contrast, the United States reported on Friday that its economy grew at a tepid 2.0 percent rate in the third quarter, reinforcing expectations that the Federal Reserve will agree this week to ease monetary policy by embarking on a new program of bond purchases.
The HSBC Markit PMI for India, Asia's third-largest economy, rose to 57.2 in October from 55.1 in September.
"The manufacturing sector remains supported by strong local consumption growth, and growing employment suggests that domestic demand will remain robust," Frederic Neumann, co-head of Asian Economics Research at HSBC, said in a statement.
STRONG KOREAN EXPORTS
Not all the economic news from Asia was rosy.
The South Korean manufacturing sector shrank for the second month in a row as the HSBC/Markit PMI fell to 46.7 in October, the lowest since February 2009, from 48.8 in September.
New export orders also fell below the boom-bust line of 50 for the first time since February 2009.
But actual exports from Asia's fourth-largest economy rose 29.9 percent in October from the same month last year.
That surpassed the 21.9 percent increase economists had expected and boosted investor confidence in the export-dependent economy. Shares in South Korea's top automakers shot to record highs, while the won rallied against the dollar.
"It bodes well for the economy and solid overseas demand will continue to be a major driver for economic growth," said So Jae-yong, an economist at Hana Daetoo Securities in Seoul.
Together with a jump in inflation to a 20-month high of 4.1 percent in the year to October, the data also strengthened the case for a rise in interest rates this month.
South Korea's PMI mirrored that for Japan, released last Friday, which showed that manufacturing contracted for a second consecutive month as slowing demand and a rising yen led to the first drop in export orders in more than a year
(Writing by Alan Wheatley, Global Economics Correspondent; Editing by Neil Fullick)
SYDNEY (Reuters) – Asian shares jumped on Monday, lifted by surprisingly strong manufacturing data from China, while the dollar shot up from a 15-year low against the yen, stirring speculation of Japanese intervention.
But the U.S. currency quickly gave up its gains, with traders saying the move was likely caused by a trading glitch rather than intervention. The Japanese Finance Ministry declined to comment on the incident.
The MSCI Asia share index outside Japan (.MIAPJ0000PUS) rose 1.6 percent, led by gains in Hong Kong and Shanghai, after data showed China's official purchasing managers' index (PMI) for manufacturing rose to a six-month high in October.
The PMI rose to 54.7 in October from 53.8 in September, higher than the median forecast of 52.9 in a Reuters poll of 12 economists and, in fact, higher than every individual forecast.
HSBC's China PMI also hit a six-month high last month.
But Japanese shares, Asia's worst performer this year, eased a touch as the yen's strength weighed on exporters.
The Nikkei average (.N225) was down 0.2 percent near a new seven-week low. Top Japanese brokerage Nomura was among the biggest losers (8604.T), with its shares slumping 3.6 percent after Friday's disappointing earnings.
For the year, Japan's underperformance is striking. The Nikkei is down 13 percent, compared to an 11 percent rise in the MSCI index.
Speculation about possible Japanese intervention kicked in after the dollar spiked as far as 81.60 yen on trading system EBS in a matter of seconds, from 80.40 before, and compared to a 15-year low of 80.21 hit in early trade.
But by mid-morning Asian trade, the yen had recovered to 80.67, within spitting distance of its post-war record low of 79.75.
"Judging from the price action, the market probably doesn't think right now there had been any intervention," said a trader at a major Japanese bank.
Currency investors have been on edge about possible intervention from Tokyo after it intervened to sell the yen in September for the first time in six years to pull the dollar from a 15-year low.
The U.S. dollar (.DXY), struggling to hold ground due to entrenched speculation the Federal Reserve could further ease policy when it meets this week by buying more U.S. government bonds, was down 0.3 percent against a basket of currencies.
The soft U.S. dollar was a boost to commodity prices. Oil rose toward $82 a barrel, gold hit a two-week high, spot silver jumped to 30-year peaks and palladium climbed to nine-year highs.
Some analysts said share and commodity prices could tear higher still if the Fed pledges to buy more bonds than the market expects, or if the Bank of England follows the Fed's lead by further loosening policy when it meets this week.
The market thinks the Fed would promise to buy at least $500 billion of Treasury debt over five months to support U.S. growth.
"Gold has perked up again," said Greg Gibbs, an RBS analyst in Sydney. "The gold bugs may also be eyeing the not negligible risk that the Bank of England follows the Fed."
(Additional reporting by Tokyo Markets team)
(Editing by Kazunori Takada)
TOKYO (Reuters) – Japan's securities industry regulator is conducting interviews with brokerages in connection with suspicious trading ahead of new share offers, a source familiar with the matter said on Monday.
The Securities and Exchange Surveillance Commission is checking with brokerages on their compliance regimen regarding share underwritings, and specifically how they ensure confidentiality of information when they sound out institutional investors to gauge potential demand for new shares, said the source, who asked not to be identified because he was not authorized to discuss the matter publicly.
The Tokyo Stock Exchange said on Friday it was looking into complaints about heavy short-selling of stocks of companies days ahead of their announcement of capital raising plans.
(Reporting by Taiga Uranaka and Noriyuki Hirata; Editing by Edmund Klamann)