Asia stocks cheer U.S. data, Europe optimism

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By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Asian shares climbed Monday, joining in a global stock rally triggered by stronger U.S. economic data and optimism for progress in Europe.

Japan’s Nikkei Stock Average JP:100000018 +1.86%  jumped 1.8%. South Korea’s KospiKR:SEU +1.94%  lifted 2%, Australia’s S&8P/ASX 200 index AU:XJO +1.21%  climbed 1.2%, and Hong Kong’s Hang Seng Index HK:HSI +2.05%  surged 2%.

The Shanghai Composite Index CN:000001 +0.41% , however, was again an outlier, rising just 0.4% amid ongoing questions over the strength of the Chinese economy.

Still, for the major Asian equity markets, “reaction to Friday events is behind the improvement today,” said Jamie Spiteri, head of trading at Shaw Stockbroking in Sydney.

Those events contained some positive messages on two key areas of anxiety for investors — the manner in which the European crisis is being handled and the heath of the U.S. economy, Spiteri said.

Data out Friday showed that U.S. employment data beat expectations and helped investors overcome fear that the U.S. economy will slow further.

“The bigger-than-expected 163,000 increase in U.S. non-farm payrolls in July, alongside the small rise in the ISM non-manufacturing index, should ease fears that the U.S. economy is following Europe into recession,” said Paul Ashworth, economist at Capital Economics. (Read more on U.S. jobs and ISM services data.)

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European concerns also subsided a bit at the end of last week amid renewed speculation that the European Central Bank will buy Spanish and Italian government bonds as soon as next month.

Major movers

Hong Kong companies particularly exposed to Europe were among the best performers Monday, with apparel firm Esprit Holdings Ltd. HK:330 +4.27%  ESHDF +2.40%  leaping 4.5%, and banking giant HSBC Holdings PLC UK:HSBA +4.05%  HBC +4.32%   HK:5 +3.28%  rallying 3.2%.

Earnings gave some Japanese firms additional momentum, with auto manufacturer Toyota Motor Corp. JP:7203 +2.45%   TM +5.23%   climbing 2.3% as investors cheered strong earnings out Friday. The firm came off early highs, however, after it said that it will recall more than 160,000 RAV4 vehicles sold in China. (Read more on Toyota earnings.and recall .)

Isuzu Motors Ltd. JP:7202 +5.40%   ISUZY -3.39%  jumped 5.7% after it reported a more-than-doubling of its quarterly profit. Read more on Isuzu earnings.

Other Japanese car stocks picked up on the sector gains, as Mazda Motor Corp.JP:7261 +5.62%   MZDAF -1.69%  jumped 4.5%, and Subaru maker Fuji Heavy Industries Ltd.JP:7270 +5.94%   FUJHF -6.34%  zoomed up 5.6%.

Japanese brokerage Daiwa Securities Ltd. JP:8601 +1.79%   DSEEY +0.84%  gained 2.2% after swinging back to a quarterly net profit of 2.68 billion yen ($34.1 million) from a loss of ¥9.43 billion in the year-earlier period.

Korean technology firms were performing strongly, with SK Hynix Inc. HXSCL 0.00%  up 4.1% and heavyweight Samsung Electronics Co. SSNLF -0.30%  gaining 4.4%.

Investors had pushed commodities sharply higher in New York on Friday after the jobs data weighed on the U.S. dollar, with oil futures gaining almost 5% in the session. Read more on oil futures.

Energy companies advancing in Hong Kong included Cnooc Ltd. HK:883 +3.00%  CEO +2.01% , up 3%; while China Petroleum & Chemical Corp. HK:386 +3.14%   SNP +1.63% — better known as Sinopec — rose 3.1%.

Japanese oil-sector firms were also trading with gains, with Inpex Corp. JP:1605 +4.44%  IPXHY +4.83%  climbing 4.3% after raising its profit forecasts and reporting a 74% rise in its first-quarter net profit.

Metal firms were the best performers by sector in Australia, as Rio Tinto Ltd.AU:RIO +4.38%   RIO +5.29%  jumped 4.4% and Fortescue Metals Ltd. AU:FMG +2.87%  FSUMF -4.96% rose 3.1%, with the latter also announcing it had secured financing to expand its Western Australian operations. Read more on Fortescue fundraising.

Tokyo-listed Pacific Metals Co. JP:5541 -14.18%   PFMTF -2.70%  dropped 14.6%, however, after it said it now expects to report a net loss for the year rather than the profit it had previously been forecasting.

Also falling in Tokyo, Sharp Corp. JP:6753 -4.69%   SHCAF -23.77%  shed 5.2%, extending a recent heavy sell-off.

A Taiwanese news report cited by Dow Jones Newswires said that Hon Hai Precision Industry Co. TW:2317 +6.62%  may renegotiate its investment in Sharp, given the large drop in the latter’s share price since the deal was drawn up.  Read more on reported Hon Hai-Sharp renegotiation.

Sarah Turner is MarketWatch's bureau chief in Sydney.