* MSCI Asia ex-Japan jumps 1 pct, Australia outperforms
* Euro, dollar index steady
* RBA decision at 0330 GMT, seen keeping rates steady
By Chikako Mogi
TOKYO, March 5 (Reuters) – Asian shares rebounded strongly
on Tuesday after a sharp sell-off triggered by slumping Chinese
stocks the previous session, as a globally accommodative
monetary stance helped revive risk appetite.
The MSCI’s broadest index of Asia-Pacific shares outside
Japan jumped 1 percent after tumbling 1.3
percent as Chinese shares dived on concerns Beijing’s move to
tighten the housing market could weigh on growth.
The February HSBC Services Purchasing Managers’ Index (PMI)
fell to 52.1 from January’s 54.0, after seasonal adjustments, in
line with slower factory activity that suggests a modest rebound
in the world’s second-biggest economy this year.
Outgoing Premier Wen Jiabao said on Tuesday in remarks
prepared for the opening of China’s annual parliament meetings
that Beijing would boost fiscal spending in 2013 in a bid to
deliver economic growth of 7.5 percent for the year.
“The Chinese economy will decelerate from the second
quarter, but the slowdown is not significant enough to derail
the economic recovery,” said Dariusz Kowalczyk, senior economist
and strategist for non-Japan Asia at Credit Agricole CIB in Hong
Kong, adding that Monday’s sell-off in Chinese shares was
“justifiable” because markets tend to move ahead of growth
direction.
“As property curbs are expanded, real estate construction
may well slow to the point of adding additional downward
pressure on the economy. However, the 7.5 percent growth target
announced today is safe,” he said.
Australian stocks outperformed their Asian peers
with a 1.5 percent rally, led by financial stocks ahead of an
interest rate decision by the Reserve Bank of Australia at 0330
GMT, while retail stocks also soared on data showing a tick-up
in consumer spending in January.
The RBA kicks off a series of monetary policy meetings
taking place this week. Major central banks around the world are
expected to maintain a dovish stance, given fragile economic
conditions, political uncertainties in Europe, and U.S. budget
wrangling.
Growth concerns prompted initial caution on Wall Street, but
investors took advantage of the decline to jump in, even though
indexes hover near historic or multi-year highs. Analysts also
say none of the uncertainties is seen as a risk serious enough
to trigger a financial crisis.
Janet Yellen, the Federal Reserve’s vice chair, said on
Monday the U.S. central bank’s aggressive monetary stimulus is
warranted given how far the economy was operating below its full
potential. Her comments helped support investor sentiment.
Japan’s Nikkei stock average rose 0.8 percent. It
scaled a fresh 53-month high on Monday
“Despite spending cuts in the U.S., a lack of any kind of
political resolution in Italy and weaker data in Asia, we just
can’t get a proper ‘risk-off’ mood going … as mad money
(quantitative easing and zero interest rate policy) trumps every
other concern,” said Kit Juckes, strategist at Societe Generale
in a note to clients.
UNCERTAINTIES
Aside from the Chinese government’s action to cool the
overheated property market, there is concern about U.S. growth
slowing after the automatic “sequestration” spending cuts were
allowed to kick in starting March 1.
Ongoing political turmoil in Italy also dented investor
appetite for risk as last month’s inconclusive election could
pave the way for another vote within months.
Italy’s 10-year government bond yields rose to
4.881 percent on Monday, but expectations the European Central
Bank would use its scheme to help fund struggling euro zone
nations underpinned investor confidence and capped the yields
from rising further.
The euro held steady around $1.3024 and the dollar
was also steady against a basket of six major currencies.
The yen firmed 0.2 percent against the dollar to 93.32
. The benchmark 10-year Japanese government bond yield
fell as low as 0.585 pecent earlier, its lowest
since June 2003 on expectations for bolder Bank of Japan easing.
Monetary easing must accompany fiscal spending to help Japan
escape deflation because increased spending could cause bond
yields and the yen to rise, Kikuo Iwata, the government’s
nominee to become central bank deputy governor, said on Tuesday.
The ECB holds its policy meeting on Thursday, and while few
expect the central bank to cut interest rates this week, many
see such an action to come sooner than later.
The RBA is expected to keep its cash rate unchanged at a
record low 3.0 percent, having already lowered it by 175 basis
points in the past 15 months.
Later in the week the BOJ and the Bank of England hold their
meetings.
Gold has been lackluster as global risk aversion abated.
Data showed holdings of the world’s largest gold-backed ETF, the
SPDR Gold Trust, posted a ninth consecutive daily decline
on Friday after reporting the biggest ever one-month drop in
February.
Spot gold was up 0.2 percent at $1,576.71 an ounce
early on Tuesday.
U.S. crude was up 0.3 percent at $90.36 a barrel
while Brent rose 0.4 percent to $110.53.
