Stocks eke out marginal gains in Asia

Overall undertone flat, strong economic data supports sentiments

Asian markets mostly rose ahead of the US Federal Reserve meet amid a continued firm undertone in the overall risky assets. Investors betted that world economic momentum would remain supportive given that China has refrained from hiking its benchmark interest rates and the US president Barack Obama's tax-cut package had gained enough votes in the Senate. The Organization for Economic Cooperation and Development's (OECD) composite leading indicators (CLIs), designed to anticipate turning points in economic activity, suggests stabilization in the pace of expansion across the OECD, ensuring that the world economic recovery remains on track. In overnight trades, the US stocks closed on a mixed note on amid lack of economic pointers. Markets were also seen poised for the Federal Reserve's interest rate decision due today. Dow gained 18.24 or 0.2% to close at 11,428.56. .



The US dollar has dipped in the last session after the tax deal reports hit the newswires and fell further today amid choppy moves. This pushed up the risk appetite and most Asian indices started on a firm footing. The Japanese stocks closed in positive territory, on optimism about global economic recovery amid mixed local economic data. The benchmark Nikkei 225 hit a seven-month high before ending at 103717, up 22.88 points, or 0.22% on the previous day. Japanese business leaders welcomed Prime Minister Naoto Kan's proposal to cut the nation's corporate tax rate. Kan reportedly proposed cutting the nation's 40% corporate tax rate by five percentage points starting in the fiscal year beginning April 1. The Japanese corporates have been calling for the corporate tax cut, to bring Japan's rate more in line with the international average of 25-30%.

On the economic front, a report released by the Ministry of Economy, Trade and Industry revealed that Japanese industrial production declined 2% month-on-month in October. The decline for October was revised from 1.8% fall estimated initially. The capacity utilization also dropped by a seasonally adjusted 2.3% in October from the previous month.

The Australian stocks closed in green on steady cues from the rest of the indices and mostly firm commodity prices. Gold miners had a good time as the global prices surged beyond $1400 per ounce. Intraday selling kept the gains under check though as the benchmark S&P/ASX200 Index added 9.80 points or 0.21% to close at 4,767 points. On the economic front, data released by the Australian Bureau of Statistics revealed that the total number of new dwelling construction starts in the country declined by a seasonally adjusted 13.2% in the September quarter, following a 2.1% increase in the June quarter.

In China, a choppy trading session was witnessed with the markets eking out small gains on select stocks in infrastructure and agriculture segment. The markets continued to eye inflationary pressures as a senior researcher with the Development Research Centre of the State Council reportedly said that China's consumer prices are expected to rise around four percent next year on rising wages, higher commodities prices and a flood of liquidity into the economy. The benchmark Shanghai Composite Index closed up 4.12 points or 0.14 percent higher at 2,927.08 points today after an uneven session.

In Mumbai, waning fears of a near term interest rate hike by the central bank with data showing a fall in inflation in November 2010 triggered gains on the key benchmark indices for the third running day in a thin trade today. The wholesale price index (WPI) rose an annual 7.48% in November, in line with forecast. The figure was lower than the annual rise of 8.58% in October. As per provisional figures, the BSE 30-share Sensex was up 87.58 points or 0.44% to 19,779.36. The Sensex rose 145.04 points at the day's high of 19,836.82 in late trade.

In other markets, South Korea's Seoul Composite added 0.62%, Hong Kong's Hang Seng gained 0.49% while Taiwan's Taiex rose 0.04%. US dollar continued to drop today; setting fresh three week lows against the Euro on the strong risk appetite. Light sweet crude oil futures for January delivery rose near $89 per barrel before dropping slightly as traders eyed the US weekly inventories data due later on in the day. The commodity is trading at $88.86 a barrel in electronic trading, up 25 cents per barrel from previous close. Gold rose to a high of $1407.90 per ounce and currently trades at $1405.30, up $7.30 per ounce from the previous close