Asian markets soar, Tokyo lifted by output data

HONG KONG: Asian stocks surged on Tuesday, with Tokyo boosted by data showing factory output lifting last month, raising hopes for Japan's recovery from the March 11 earthquake and tsunami.

The euro was also given a lift by a report that Germany may drop its call for Greece to restructure its debt, giving Athens hope that it will get a new tranche of aid to help it avoid a default.

Tokyo gained 1.16 percent by the break. Hong Kong was 0.95 percent higher, Sydney rose 0.80 percent and Shanghai added 0.30. Seoul was 1.10 percent up and Taipei gained 0.73 percent.

The Nikkei rallied after the government said factory output rose one percent in April from the previous month.

Although the jump was lower than the 2.9 percent analysts had expected, it followed a record 15.5 percent drop in March, as the quake-tsunami broke supply chains and caused power outages that pushed the country back into recession.

The government forecast output would rise 8.0 percent in May and 7.7 percent in June.

"Production still remains stagnant due to the impact from the Great East Japan Earthquake," the industry ministry said in a statement released with the figures, adding a recovery was expected in the near future.

Cosmo Securities strategist Toshikazu Horiuchi said: "Looking at these outlook figures, we are able to confirm the faster-than-expected recovery in Japan's supply chain."

However, he told Dow Jones Newswires that the outlook after June remained uncertain due to ongoing electricity shortages.

Most of the Nikkei big names rose, although Tokyo Electric Power, which operates the Fukushima atomic plant that was crippled by the March 11 disaster, slipped 3.1 percent a day after Standard & Poor's cut its credit rating.

The agency downgraded TEPCO by two notches to BB-plus from BBB, and slashed its long-term corporate credit rating five notches to B-plus, citing concerns over its debt.

On currency markets the euro picked up after a report in the Wall Street Journal saying Germany was considering dropping its push for a Greek debt rescheduling.

The news provided for a little risk appetite, lifting the euro to $1.4382 from $1.4282 in late Toronto trade Monday, and at 116.22 yen from 115.53 yen.

The dollar was at 80.85 yen from 80.94. New York markets were closed on Monday for a public holiday.

New York's main contract, light sweet crude for July delivery, gained 35 cents to $100.94 a barrel and Brent North Sea crude for July delivery was up 58 cents at $115.26.

Gold opened at $1,539.00-$1,540.00 per ounce in Hong Kong, up from Monday's close of $1,535.00-$1,536.00. (AFP)