Asian shares rise as Wall Street rallies on earnings, sentiment

Hong Kong: Asian shares were mostly higher yesterday following another Wall Street rally on positive corporate earnings and upbeat US sentiment, although ongoing European debt woes continue to weigh.

Markets and the euro were given some support by news that ratings agency Fitch was not planning to strip France of its top triple-A rating for 2012, easing persistent concerns over Europe's fiscal woes.

Tokyo closed up 0.30 per cent, or 25.62 points, at 8,447.88 and Sydney added 0.85 per cent, or 35.3 points, to close at 4,187.5 while Hong Kong was 0.78 per cent higher, adding 147.66 points to end at 19,151.94.

However, Seoul shed 0.41 per cent, falling 7.67 points to close at 1,845.55 and Shanghai slipped 0.42 per cent, or 9.69 points, to 2,276.05 following two sessions that saw it add more than five per cent.

Support for risk assets

"Within the last seven days we have witnessed economic data which has been supportive of traders branching into risk assets," Tim Waterer, a senior foreign exchange dealer at CMC Markets, said in a note, according to Dow Jones Newswires.

US aluminium giant Alcoa kicked off the corporate earnings season, saying full-year profit more than doubled in 2011 to $611 million (Dh2.2 billion) and delivered an upbeat demand outlook, although it also posted a fourth-quarter loss of $191 million on declining revenues.

The news boosted Wall Street, as the Dow rose 0.56 per cent to its highest finish since July, while the tech-rich Nasdaq added 0.97 per cent and the broader S&P 500 advanced 0.89 per cent.

US traders also cheered as China's trade surplus shrank in 2011, prompting speculation that Beijing will further loosen monetary policy to support growth in the world's second-biggest economy.

Continuing to buoy sentiment was data earlier this week showing a 9.9 per cent surge in US consumer credit in November, the biggest increase in a decade, while credit card spending and loans both rose, adding to hopes the US economy is getting back on track.

Investors also welcomed Fitch Ratings' comments that it was likely to keep France's top-notch rating for now, providing a little respite to dealers who had feared such a move against one of the Eurozone's key players.

Fresh talks

However, the region's debt crisis was still playing on dealers' minds as leaders hold fresh talks aimed at addressing the issue, with a European Central Bank (ECB) policy meeting set for today. Markets were also cautious ahead of debt auctions by struggling Spain and Italy, also starting today.

"The market's focus is now shifting to Europe's debt issue again," said Lim Dong-Rak, analyst at Hanyang Securities in Seoul.

"Investors are doubtful whether the recent set of encouraging US economic data will continue to improve," he said.

Despite the upbeat news on France, Fitch warned Tuesday that Eurozone countries have to raise €2 trillion (Dh9.3 trillion) in 2012, with more than half of that accounted for by Spain, Italy, Belgium and Ireland — those most at risk of a downgrade.

Italy was the most worrying of the embattled Eurozone countries and could see its credit rating cut this month, the agency said.

Meanwhile, banks' deposits with the ECB hit a new record high, suggesting tensions in the financial system continue despite unprecedented injections of liquidity.

Banks put €481.9 billion on deposit for 24 hours at the ECB overnight on Monday, beating the previous day's record of €463.6 billion.