China policy hopes boost Asia stocks, Europe markets down

Asian stock markets rose, focused on expectations that China will loosen its monetary policy to boost growth. But European shares slid in early trading as the continent's debt crisis once again moved to the forefront.. Benchmark oil hovered near $101 per barrel while the dollar fell against the euro and the yen. Britain's FTSE 100 fell 0.6 per cent to 5,662.19. Germany's DAX slipped 0.5 per cent to 6,304.31 and France's CAC-40 shed 0.6 per cent to 3,250.74. On Wall Street, Dow Jones industrial futures fell 0.1 per cent to 12,403 while S&P 500 futures lost 0.2 per cent at 1,287.40. Investors were jittery over Greece, which is running out of time to avoid becoming the first country, that uses the euro, to default on its debts and potentially trigger a chain reaction that could ultimately destabilize the global economy. Athens was to resume negotiations later Wednesday with the Institute of International Finance, which represents bondholders. Talks stalled on Friday after disagreement erupted over the terms of new bonds that Greece would issue to replace expiring bonds that it cannot afford to pay off. Asian stocks fared better amid confidence in the Chinese economy. Japan's Nikkei 225 index rose 1 per cent to close at 8,550.58. Hong Kong's Hang Seng added 0.3 per cent to 19,686.92. South Korea's Kospi was nearly unchanged at 1,892.39, while Australia's S&P/ASX 200 was up slightly at 4,217.90. Benchmarks in Taiwan, Indonesia and Malaysia also rose. Mainland Chinese shares fell on profit-taking after a brisk day of trade Tuesday that saw the biggest gains in 27 months. The Shanghai Composite Index lost 1.4 per cent to 2,266.38, while the Shenzhen Composite Index dropped 2.7 per cent to 837.40. Investors cheered news out of China on Tuesday when the government said its economy slowed less dramatically in the fourth quarter than feared — but still enough of a slowdown to persuade investors that Beijing will pursue a pro-growth monetary policy, analysts said. "People have been buying stocks in anticipation of a relaxation in monetary policy by the Chinese government," said Derek Cheung, chief investment officer at Neutron INV Partners Ltd. in Hong Kong. "The market expects this around Chinese New Year. If China doesn't loosen around the new year, the market may come under pressure." The holiday begins Jan. 23. China is one of the biggest importers and slower growth could have global repercussions if it cuts demand for iron ore, industrial components and other goods from Australia, Brazil, Southeast Asia and elsewhere. It would also mean less demand for U.S. and European capital goods for Chinese factories and construction sites, and smaller profits for U.S. and European companies that do business in China. The luxury goods industry would also feel a significant pinch, since China is just about its only growth market. Commodity shares jumped on the growth data out of China. In Australia, miners Fortescue Metals Group soared 5.2 per cent and Rio Tinto Ltd. added 1.4 per cent after both companies reported target-beating production figures. But financial shares came under pressure on weak quarterly earnings from some U.S. banks, including Citigroup Inc., which said its fourth-quarter income fell 11 per cent due in part to lower investment banking income and an accounting charge. Australia & New Zealand Banking Group fell 1.2 per cent and Hong Kong-listed Agricultural Bank of China lost 1.6 per cent. South Korean high-tech shares lost ground. Samsung Electronics Co., the top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, fell 0.6 per cent. LG Electronics shed 1.5 per cent, and Hynix Semiconductor was 1.2 per cent lower. Benchmark crude for February delivery was up 8 cents to $100.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract finished at $100.71 per barrel in New York on Tuesday. In currency trading, the euro rose to $1.2755 from $1.2722 late Tuesday in New York. The dollar fell to 76.68 yen from 76.82 yen.

China policy hopes boost Asia stocks, Europe markets down

Investors were jittery over Greece, which is running out of time to avoid becoming the first country that uses the euro to default on its debts and potentially trigger a chain reaction that could ultimately destabilize the global economy.

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