China, Japan stocks rise; India retreats

Japanese stocks gained Tuesday on a weakened yen and a record finish for key U.S. indexes, while Chinese stocks edged higher after a choppy trading session amid hopes Beijing may act to avert a steeper economic slowdown.

Indian stocks fell and the rupee jumped after the Reserve Bank of India tightened policies on Monday to stem the local currency’s weakness, raising fears the moves would weigh on the economy.

Japan’s Nikkei Stock Average rose 0.6% to end the day at a seven-week high as trading resumed after a three-day holiday-extended weekend, with the U.S. dollar  rising from its level on Friday to keep the 100-yen level in sight.

China’s Shanghai Composite Index  added 0.3%, as investors remained focused on the action policy makers might take to prevent a further economic slowdown. Hong Kong’s Hang Seng Index  ended marginally higher.

“We see [the GDP data] as rather weak and putting the economy on course [for a] 7.3%-7.4% growth in 2013, barring new stimulative policies,” said Crédit Agricole senior economist Dariusz Kowalczyk.

He said Beijing was expected to introduce “modest, targeted measures” in the current quarter to boost demand, as the government was “highly unlikely” to accept missing its growth target of 7.5% for 2013.

China’s economic growth eased to 7.5% in the second-quarter, slowing from a 7.7% expansion in the first three months of 2013.

Hopes for policy moves to support the economy remained even as a commentary piece in a state-owned newspaper said China was unlikely to turn to stimulus measures to boost the economy.

Several industrial stocks rallied in Shanghai afternoon trade following range-bound moves, on either side of Monday’s closing level, in the morning session.

Zhejiang Xinan Chemical Industrial Group jumped 6.5%, China Railway Erju Co.  rose 3.7% and Jiangxi Hongdu Aviation Industry Co.  rose 3.6%.

Meanwhile, Australia’s S&P/ASX 200  gained 0.1%, aided by a 1.4% rise in the shares of Rio Tinto Ltd.  after the mining giant achieved record output of iron ore in the second quarter, despite an equipment breakdown and impact from adverse weather conditions.

The advance in Tokyo came after the S&P 500  and the Dow Jones Industrial Average each set fresh record closing highs after Citigroup posted better-than-expected quarterly results, despite a weak U.S. retail sales report.

“Earnings season is taking on renewed interest as companies which have rallied strongly over the past 13 months now must prove that their recent surge is justified by earnings delivery,” said Matthew Sherwood, head of investment market research at Perpetual.

“This will be no easy feat as U.S. cost savings are now exhausted and earnings growth is now dependant on revenue growth and a sub-trend U.S. economy,” Sherwood said.

Exporters were broadly higher in Tokyo as the U.S. dollar weakened from the levels seen around Friday afternoon, to trade near the ¥100 mark.

Canon Inc.   advanced 2.7%, and Nissan Motor Co.   added 1.8%.

Fuji Heavy Industries Ltd.   added 1.7% after the Nikkei newspaper reported over the weekend that the Subaru-brand vehicle maker is expected to report a record quarterly operating profit.

Indian shares fell sharply, meanwhile, after the country’s central bank on Monday tightened policies, which included setting a ceiling on the amount that banks could borrow from its daily repurchase agreement window, and also raising the rate charged to meet lenders’ emergency funding needs.

“The central bank, presumably reluctant to use up too many foreign exchange reserves, clearly felt it had to show a stronger intent to put a floor under the rupee,” Robert Prior-Wandesforde, an economist at Credit Suisse, wrote to clients.

“The implications for real economic growth of last night’s actions are likely to be minor, but clearly they are unhelpful to our above consensus gross domestic product growth view,” he added.

In Tuesday’s afternoon trade in Mumbai, shares of ICICI Bank Ltd.   dropped 5.6% and engineering major Larsen & Toubro Ltd.  lost 3.4%. The 30-stock benchmark Sensex  gave up 1%.

Source : Marketwatch