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Asian Stocks End Higher; Hang Seng Up 0.8%

The Associated Press

By Joe McDonald

BEIJING -- Asian stocks closed higher for a second session Monday amid optimism about China after the Chinese premier said the economy was improving. European markets opened lower.

Investors remained uneasy about the U.S. economic outlook, which depressed oil prices, after last week's declines on Wall Street. Traders have grown worried that an economic recovery may be more subdued than originally hoped -- and that the huge run-up in global stock markets the last three months may be unjustified.

Still, some investors appeared heartened by Premier Wen Jiabao, who was quoted by state media over the weekend as saying China's economy was beginning to recovery steadily amid government stimulus spending. He said Beijing will maintain an easy credit policy to support growth.

Hong Kong's benchmark Hang Seng index surged more than 2% before erasing some gains to close up 0.8%.

China's Shanghai Composite index rose 0.6%, while while Japan's Nikkei 225 stock average rose 0.4% to 9,826.27, lifted by electronics companies like NEC Corp. and Nikon Corp.

"Hong Kong is up because the Chinese markets are up. Markets are up in Shanghai because investors are optimistic about the future," said Francis Lun, general manager of Fulbright Securities in Hong Kong.

Sentiment in China was helped by the World Bank's decision last week to raise its forecast of the country's 2009 economic growth to 7.2% from 6.5%. Chinese stocks have been lifted by recent data showing investment, retail sales and other indicators improving despite a plunge in exports.

But European markets opened lower, with Britain's FTSE 100 down 0.8%, Germany's DAX down 1%, and France's CAC 40 also down 1%.

Wall Street finished mixed Friday, leaving the three major indexes with their first weekly loss since early May. The Dow Jones industrial Average fell 15.87, or 0.2%, to 8,539.73, while the broader S&P 500 index rose 0.3% to 921.23. The tech-heavy Nasdaq gained 1.1% to 1,827.47.

For the week, the Dow lost 3%, while the S&P 500 sank 2.6%.

Analysts are divided over whether the U.S. market's pullback has more to go, or if it can now move higher. Many predict choppy trading well through the summer, when there is typically less volume, and as the market heads into earnings season in July.

U.S. stock index futures fell, suggesting Wall Street would open lower Monday.

Oil slipped in Asia, with benchmark crude for July delivery dropping 42 cents to $69.13 a barrel. On Friday, it fell $1.82 to $69.55.

In currencies, the dollar fell to 96.01 yen from 96.26 yen late Friday in New York. The euro declined to $1.3864 from $1.3936.