Asia shares up after China PMI

 
City A.M. Reporter
Asian shares inched higher on Tuesday, helped by improving Chinese manufacturing data, but the euro remained under pressure as surging Spanish borrowing costs stoked fears that the Eurozone’s fourth-largest economy will be forced to seek a bailout.

The HSBC flash China manufacturing purchasing managers index rose to a five-month high in July, driven up by a jump in the output sub-index and signs of an improvement in new export orders that offered some relief to fragile markets.

Asian shares erased earlier losses while oil and copper rose after the Chinese data, pushing the commodity-linked Australian dollar up to $1.0288 (£0.66) from around $1.0265.

The euro also received a temporary boost before retreating to stand not far from a two-year low against the dollar and a near 12-year low against the yen.

The single currency was undermined by Moody's Investors Service changing its ratings outlook to negative for Aaa-rated Germany, the Netherlands and Luxembourg amid Europe's ongoing debt crisis.

"China's PMI data beat market expectations and gave shorts a reason to cover today," said Orient Futures derivatives director Andy Du, referring to buying by short-sellers to realise their gains on earlier bets that markets would fall.

It was the first significant Chinese data in the third quarter and signalled that pro-growth government policies may be gaining traction in the world's second-largest economy.

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