Asian Shares End Higher; PMI Data Help Shanghai Stocks

-Asian share markets ended mostly higher Monday, with resource and shipping shares jumping in line with commodity prices and as data showed Chinese manufacturing activity continued to gather pace in July.

China's Shanghai Composite gained 1.5% to 3,462.59, the index's highest closing level in 14 months. Hong Kong's Hang Seng Index rose 1.1% to 20,807.26.

Sentiment was boosted in Shanghai after two gauges of China's manufacturing activity showed further expansion in July. The CLSA China Purchasing Managers Index rose to a 12-month high of 52.8 in July from 51.8 in June. The official PMI, issued by the China Federation of Logistics & Purchasing on Saturday, inched up to 53.3 last month, from 53.2.

"Manufacturing activity continues to accelerate and importantly, orders growth is being driven by the domestic economy," said CLSA's head of economic research Eric Fishwick. "Output and input prices rose for the first time in 11 months. Export prices lag, another sign of China looking inwards for growth."

Japan's benchmark Nikkei 225 Average ended flat after moving in a narrow range, though the broader Topix Index rose 0.8% to 957.56, stretching its winning run to a 12th successive session.

Banking stocks surged in Tokyo, after Mitsubishi UFJ Financial Group Friday reported a sharp rise in profits. Mitsubishi UFJ jumped 6%, while Mizuho Financial Group advanced 6.1%.

Elsewhere in the region, Australia's S&P/ASX 200 and South Korea's Kospi climbed 0.5% each, India's Sensex had risen 1.6%, New Zealand's NZX 50 finished up 1.1%, Singapore's Straits Times had gained 0.8% and Taiwan's Taiex slipped 0.3%.

Energy producers rallied strongly after the Chinese manufacturing data helped crude-oil futures rise above the $70 a barrel level on the Globex electronic platform. The front-month contract was recently up $1.06 at $70.51 a barrel. Mineral extractors' shares also gained on higher prices for base metals. The rally also sparked strong gains for the region's shipping stocks.

"The Chinese have basically cornered the London Metal Exchange copper market and I expect that strategy will move to other base metal markets," said Southern Cross Equities director Charlie Aitken. "They are trying to diversify away from the U.S. dollar and what better strategy than buying the world's excess metal inventories," he said.

Yunnan Copper rose 4.7% in Shenzhen while Aluminum Corp. of China soared 7.2% in Hong Kong. Alumina gained 2.3% and BHP Billiton advanced 0.6% in Sydney. Steelmakers were up sharply in Shanghai, with Wuhan Iron & Steel up 6.5% and Baoshan Iron & Steel 4.9% higher.

Among shipping names, China Cosco Holdings soared 10.2% in Hong Kong and 8.1% in Shanghai, with Korea Line Corp. rising 1.9%, Mitsui O.S.K. Lines gaining 2.1% in Tokyo and Neptune Orient Lines jumping 6.1% in Singapore.

Auto makers were also higher on growing hopes ahead of Toyota's earnings Tuesday, with Toyota up 2.5%. Nissan Motor Co. jumped 5.4% after it unveiled an electric vehicle over the weekend. Sentiment was also bolstered by news that U.S. giant Ford Motor Co. saw an increase in its July monthly sales.

Australian banks gained after Goldman Sachs JBWere upgraded major lenders to reflect a more optimistic macroeconomic outlook, following similar upgrades last week by Citigroup. National Australia Bank rose 2.6% and Australia and New Zealand Banking Group gained 2.5%.

In Mumbai, shares of Larsen & Toubro gained 0.8% in afternoon trading after the major engineering firm bagged orders worth $1.1 billion from state-owned Oil & Natural Gas Corp.

Shares of Bharti Airtel climbed 0.6%, little changed by news the mobile operator and South Africa's MTN Group have agreed to extend their exclusive talks for a merger by a month to Aug. 31.

In foreign exchange markets, the euro was up against its major rivals, recently buying $1.4293, compared with $1.4255 in late New York trade Friday and Y135.55 from Y134.95. The dollar was up at Y94.84 from Y94.66.

The Australian dollar touched $0.8411, a fresh high for the year, on improving risk appetite. It was recently buying $0.8390. The pound traded above $1.68 for the first time since October 2008.

Barclays Capital said conditions remained supportive of the strength in riskier assets. It expects key indicators this week, including U.S. ISM manufacturing purchasing managers index, non-manufacturing PMI and non-farm payrolls to show improvement and come out in line or better than market consensus forecasts.

Spot gold was down 20 cents at $953.70 per troy ounce. link....