Robust growth in China gives market sentiment needed boost

AP and AFP

LONDON/HONG KONG — Robust growth in China helped stock markets rally strongly Tuesday as investor fears of an abrupt slowdown in the world’s second-largest economy were eased. With Europe seemingly heading back into recession and the U.S. still to convince that it’s economy is improving, China is important to shore up the global economy as well as sentiment, especially at a time when many investors are openly fretting about a potentially devastating Greek debt default that could prompt further turmoil in financial markets. Government figures showed that the slowdown in Chinese growth in the final quarter of 2011 was not as big as had been feared. Though the drop to 8.9 percent represented the lowest rate in two and a half years, the markets had been expecting a bigger decline to 8.7 percent. “Equity markets are giving a positive reception to the latest set of Chinese economic data which shows that the economy is managing to avoid a hard landing despite background concerns of local government debt and banks’ loan exposure to a previously overheated real estate sector,” said Neil MacKinnon, global macro strategist at VTB Capital. Following Asia’s strong performance, Europe’s markets have traded strongly. Germany’s DAX was up 2 percent at 6,341 while the CAC-40 in France rose 1.9 percent to 3,288. The FTSE 100 index of leading British shares was 1.2 percent higher at 5,723. Wall Street was poised for a solid return from the Martin Luther King Jr. day off Monday — Dow futures were up 1 percent at 12,508 while the broader Standard & Poor’s 500 futures rose a similar rate to 1,302. Greece remains the epicenter of the European debt crisis and is struggling to agree a deal with its private creditors to get them to reduce the value of their holdings of Greek debt. Asian Markets Asian markets rose Tuesday, led by Shanghai and Hong Kong, after better-than-expected Chinese economic growth data, while a successful French bond sale and gains in European stocks also lent support. Shanghai surged 4.18 percent, or 92.18 points, to 2,298.38 and Hong Kong rallied 3.24 percent, or 615.55 points, to 19,627.75.

Tokyo gained 1.05 percent, or 88.04 points, to 8,466.40, Sydney finished 1.65 percent, or 68.3 points, higher at 4,215.6, while Seoul rose 1.48 percent, or 27.59 points, to 1,886.86. China in the morning released figures showing the world’s second-largest economy grew 8.9 percent in the last quarter of 2011, which although slower than the previous three months was better than the 8.6 percent expected. Over the whole of 2011, growth slowed to 9.2 percent from 10.4 percent the previous year. The figures indicated that while the economy was clearly slowing as a result of troubles in its key export markets in Europe and the United States, it was not having a worrying impact. “The GDP numbers seem to have reassured traders that a hard landing can be avoided and the slowdown is being managed better than first appeared,” Justin Harper, head of research at IG Markets in Singapore, said in a note, according to Dow Jones Newswires. Gold was at US$1,662.40 an ounce at 1100 GMT, against US$1,645.10 late Monday.