Asian shares rise after U.S. data, China GDP in focus

Reuters

Asian shares rose to their highest in seven months on Thursday, buoyed by a surge in U.S. housing starts that has followed other positive economic data, helping to further ease worries about a slowdown in global growth.

The brighter tone for risk assets weighed on safe-haven U.S. Treasuries, the dollar and the yen.

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The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was up 0.3 percent, rising for a third day in a row with much of the market's attention set to swing to GDP figures from China, the world's No. 2 economy, due later in the day.

Australian shares jumped 1 percent to a fresh 15-month high. South Korean shares <.KS11> opened up 0.3 percent and Japan's Nikkei average <.N225> rose 0.9 percent to its highest in nearly three weeks.

U.S. housing starts surged 15 percent in September, the fastest pace in over four years, bolstering sentiment that had already perked up on a fall in the U.S. jobless rate and strong retail sales.

That lifted Wall Street despite concerns that sluggish world economic growth has meant corporate America's year-long streak of profit growth could be nearing an end.

According to Thomson Reuters data through Wednesday afternoon, quarterly earnings for the Standard & Poor's 500 index components will now likely fall 1.7 percent from a year ago, better than a 2.3 percent drop forecast earlier.

In Europe, equity markets also rose on Wednesday, continuing to draw support from hopes that Spain will ask for an international bailout and ease jitters over the country's ability to manage its huge debts.

China's third-quarter gross domestic product is due around 0200 GMT.

It will likely show the world's second-largest economy slowed for a seventh straight quarter, missing the government's target for the first time since the depths of the global financial crisis and possibly signaling still worse to come.

"According to many estimates, the GDP is expected to miss the 7.4 percent consensus which would create an initial drag on the AUD/USD," Neal Gilbert, currency strategist at GFT Forex in New Jersey, wrote in a note.

"However, the down move may be short lived as thoughts of further stimulus from China to prop their economy back up will begin to surface. Therefore, buying of dips in the AUD/USD may be the most effective strategy after the Chinese GDP release."

The commodities-sensitive Australian dollar traded at $1.0377, hovering near a two-week high of $1.0389 hit on Wednesday.

The dollar rose to a one-month high of 79.14 yen early on Thursday, with traders keen to see if it will test its 200-day moving average which stands around 79.40.

The dollar index , which measures the greenback against a basket of six major currencies, inched up 0.1 percent to 79.087, off a one-month low of 78.935 seen on Wednesday.

Investors pushed the benchmark 10-year U.S. Treasury yield to a one-month high of 1.81 percent on Wednesday for its biggest two-day rise since late July.

"The broad USD is battling between its use as a funding currency to invest in emerging markets, and a rise in its value linked to higher yields and growth expectations," Societe Generale said in a research note.

"For now this translates into a higher USD/JPY as the most yield sensitive currency."

The euro steadied around $1.3110, after reaching a one-month high of $1.3140 on Wednesday.

Investors will be cautious ahead of a meeting of European leaders in Brussels on Thursday and Friday, watching for possible discussions over bailouts for struggling Spain and Greece.

European leaders will try to bridge deep differences over plans for a banking union at the summit, but no substantial decisions are expected, reviving concerns about complacency in tackling the three-year-old debt crisis.

Clear decisions on helping Cyprus, Greece and Spain may also only come at a finance ministers' meeting next month, officials say.

Asian credit markets firmed marginally, with the spread on the iTraxx Asia ex-Japan investment-grade index tighter by 1 basis point.

U.S. crude futures were down 0.2 percent at $91.96 a barrel.

(Editing by Edwina Gibbs)