Asia stocks rise as China growth buoys confidence

Asian stocks jumped Thursday after China's economic growth quickened and U.S. companies posted stronger-than-expected results, boosting faith in a global recovery. European shares lagged in early trade.

The move higher in Asia followed a rally on Wall Street and marked the region's third straight day of gains after a string of losses amid anxiety the market had overestimated the economy's prospects and earnings season would disappoint.

But worst-case fears about U.S. earnings haven't played out, at least not yet.

Intel Corp., the world's biggest chipmaker, helped confidence with results that topped expectations and a robust outlook for the second-half of the year. The news came after Goldman Sach Group Inc.'s quarterly profit comforted investors the day before.

China, meanwhile, said its economy accelerated in the second quarter, expanding by 7.9 percent, amid a surge in consumer spending and factory output on the back of massive government stimulus measures.

Analysts said the quicker expansion, above most market forecasts, put the world's third-largest economy within reach of the government's 8 percent full-year growth target. It offered yet more assurances for global investors who, thrilled by China's ability to keep its economy growing as other countries slump, have already driven Shanghai's stock market up nearly 75 percent this year.

"This should give people confidence that China's economy is on strong footing and that there are a lot better days ahead," said Alan Landau, Hong Kong-based president of Marco Polo Pure Asset Management, which oversees about $120 million in mostly mainland Chinese equities.

"All the signs point to expansion in China. Sentiment is very positive toward China. Where else in the world right now can you find that kind of growth?"

Early going in Europe, benchmarks in Britain and Germany were off about 0.3 percent, with France's index down about 0.1 percent. U.S. futures pointed to losses Thursday: Dow futures were down 35, or 0.4 percent, at 8,508 and S&P futures were off 3.9, or 0.4 percent, at 923.30.

Every major Asian benchmark opened green, though many traded off their highs by the afternoon as caution began to set in after U.S. market futures dropped and as struggling U.S. lender CIT Group Inc., which was denied a government bailout, headed for bankruptcy.

Japan's Nikkei 225 stock average gained 74.91 points, or 0.8 percent, to 9344.16 and Hong Kong's Hang Seng was up 103.21, or 0.6 percent, at 18,361.87.

South Korea's Kospi added 0.8 percent to 1,432.22. Australia's index advanced 1.8 percent, and Singapore's stock measure was higher by 0.5 percent.

In mainland China, the Shanghai benchmark was unable to hold its advance, losing 0.2 percent to 3,183.74. The country's markets are still largely closed to outside investors, so often move out of sync with global bourses.

Among the day's best performing stocks, Mazda surged 6.2 percent in Tokyo on news Toyota may providing its key hybrid technology in a tie-up. In Australia, mining giant Rio Tinto gained 4.6 percent.

Despite their ascent this year, Chinese shares still trade far below their highs. Shanghai's index, for example, is about half its peak above 6,000 in 2007.

But a number of investors believe it's a only matter of time before mainland equities hit fresh highs.

With Beijing's central planners bent on sustaining growth, they'll want to keep the asset markets healthy and worry less about speculation than about creating wealth, said Robert Howe of asset manager Geomatrix in Hong Kong.

"They're succeeding with the economic stimulus plans against really daunting odds," Howe said. "There's certainly hope for higher highs, and we think it's quite possible the Shanghai market will make a new high."

On Wall Street Wednesday, markets surged with investors cheered by earnings, as well as a more positive assessment of the economy from the U.S. Federal Reserve and manufacturing figures that pointed to an easing in the recession.

The Dow jumped 256.72, or 3.1 percent, to 8,616.21, its biggest gain since March 23.

Oil prices gave up some early gains in Asian trade, with benchmark crude for August delivery down 37 cents at $61.17 a barrel. The contract surged $2.02 overnight, taking its cue from Wall Street.

The dollar weakened to 93.62 yen from 94.23 yen. The euro fell to $1.4076 from $1.4099.