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Asia shares climb on China PMI data

Hong Kong - Asian shares rallied on Thursday as data indicated an improvement in Chinese manufacturing activity and minutes from the Federal Reserve showing officials considering their policy options after the bank's stimulus programme ends.

Wall Street provided a healthy lead, with all three main indices well up, while the dollar added to its gains in New York as traders become more confident in higher-yielding, riskier assets.

Tokyo jumped 1.60% by the break, Hong Kong added 0.74 percent, Sydney was 1.10% higher and Seoul put on 0.61% while Shanghai added 0.65%.

HSBC said preliminary data from its purchasing managers' index (PMI) showed activity in China's factories shrinking at a much slower pace in May than April.

The banking giant's PMI improved to 49.7 from 48.1 last month.

While the figure is below the 50 mark that suggests contraction, it is the second straight month of improvement and will fuels hopes the world's number two economy is picking up after months of slowing.

"Some tentative signs of stabilisation are emerging, partly as a result of the recent mini-stimulus measures and lower borrowing costs," HSBC economist Qu Hongbin said in a statement.

However, he added that "downside risks to growth remain, particularly as the property market continues to cool".

In the United States, minutes from the Fed's April committee meeting showed policymakers discussing how to manage the impact of an interest rate hike they expect to implement in the middle of next year.

Their talks come as the bank winds down its massive stimulus programme owing to signs the economy is getting back on track after the financial crisis.

"The committee's discussion of this topic was undertaken as part of prudent planning and did not imply that normalisation would necessarily begin sometime soon," the minutes said.

"Because the Federal Reserve has not previously tightened the stance of policy while holding a large balance sheet, most participants judged that the committee should consider a range of options and be prepared to adjust the mix of its policy tools as warranted."

Rates have been at a record low since December 2008, part of the bank's unprecedented loose monetary policy aimed at helping the economy recover from the global recession.

On Wall Street the Dow rallied 0.97%, the S&P 500 jumped 0.81% and the Nasdaq rose 0.85%.

And in currency trade the greenback bought ¥101.45 in the morning, up from ¥101.38 late in New York and much higher than the ¥101.17 in Tokyo earlier on Wednesday.

The euro bought $1.3679 and ¥138.86 against $1.3686 and ¥138.76 in US trade.

Oil prices dropped after rallying late on Wednesday on news that US stockpiles had plummeted, lifting hopes that demand is picking up.

The US benchmark, West Texas Intermediate for delivery in July, dipped 15 cents to $103.92 in early Asian trading, while Brent North Sea crude for July eased 5c to $110.50.

Gold fetched $1 292.85 an ounce at 02:30 GMT compared with $1 292.14 late on Wednesday.

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