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Asia stocks rise on copper prices

Hong Kong - Asian shares rose on Monday, boosted by mining stocks after a massive earthquake in Chile, the world's top copper producer, and on signs that Greece's debt crisis could be easing.

European shares also looked set to open higher after a European lawmaker said that Germany, France and the Netherlands plan to buy Greek bonds to give Athens more breathing room. US stock futures rose 0.7%.

The euro eased slightly after rising 0.4% on Friday amid talk that eurozone policy markers were close to agreeing a deal to bail out Greece.

But the sterling fell to a nine-month low against the dollar, hurt by political uncertainty after an opinion poll showed chances of an inconclusive result in a British election due in months.

Copper prices jumped to their highest levels in five weeks after an 8.8-magnitude quake on Saturday forced the shutdown of up to a fifth of Chile's copper mine capacity.

Shanghai benchmark third month copper leapt by its 5% daily limit in early trade and was still up 4% by afternoon, pushing up Asian resource shares. The 3-month copper contract on the London Metal Exchange struck an early high of $7 600 a tonne before easing to $7 450.

Asian equity markets were also buoyed by reports which showed factory activity in the region's main economies continued to expand last month, with India and South Korea growing at their fastest pace in around two years, although China's growth rate showed some signs of moderating.

The MSCI index of Asian shares excluding Japan rose 1.2% as risk appetite improved with mining stocks, consumer staples and financials accounting for most of the gains. In Hong Kong, Jiangxi Copper surged more than 6%.

The jump in copper prices also stoked Japan's Nikkei average, which climbed 0.5% as metal shares such as Sumitomo Metal Mining Co rallied 1.1%.

"Equity markets are taking it (the Chinese data) fairly constructively to mean that mainland policymakers' attempts to cool some the excess exhuberance in domestic economy are starting to have an effect," said Macquarie Securoities strategist Michael Kurtz.

"The markets are still focused on risk right now so it will be critical to see a resolution of some of the fiscal concerns in Europe," he added.

Greece may soon announce new steps to cut its budget deficit, a government minister said on Sunday.

"There may be a view in the market that resources will be bought after Chile's quake, but given worries about economic growth in Europe, gains in the price of resources will likely be limited," said Fumiyuki Nakanishi, manager at SMBC Friend Securities.

Australia's benchmark stocks index the S&P/ASX 200 index rose 1.1%, with mining shares underpinning the gains, but trade was thin ahead of a Reserve Bank of Australia interest rate decision on Tuesday.

Markets in Australia are pricing in a 60% chance of a 25-basis-point rate rise to 4.0%. But after last month's surprise decision when the central bank left rates unchanged, investors are wary of betting on its next move.

Growth-linked currencies such as the Australian dollar and the New Zealand dollar both weakened after the China manufacturing data.

The Australia dollar dropped to a low of $0.8971, from a high of $0.9009. China is the biggest buyer of Australia's commodity exports.

Currencies

Sterling also fell to a one-year low against the yen on growing political uncertainty in the UK.

Traders said fears of a possible hung parliament after the elections could undermine the country's already fragile economic recovery, prompting many to add to short positions in the pound.

Sterling dropped to as low as $1.5096, down about 0.9% and the lowest since mid-May 2009.

The yen, pared some of its gains, easing to ¥89.03 per dollar from ¥88.86 late on Friday in New York.

The US dollar index rose 0.2% against a basket of major currencies after data on Friday showed US gross domestic product expanded at a 5.9% annual rate in the fourth quarter, faster than the 5.7% pace estimated earlier.

Oil edged up to nearly $80 a barrel, extending last month's stellar gains of over 9%, amid threats by Iran that it could cut off energy supplies to Europe over its opposition to Tehran's contentious nuclear programme.

- Reuters

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