Upbeat US economic figures help stocks advance

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Associated Press

Posted on June 28, 2012 at 12:01 AM

Updated Thursday, Jun 28 at 12:02 AM

BANGKOK (AP) — Good news about the U.S. economy helped Asian stock markets rise Thursday, although lingering fears about Europe's ability to tame its debt turmoil kept gains in check.

U.S. government figures showed that durable goods orders rose by 1.1 percent in May after two months of declines. On top of that, a report showed that pending home sales jumped in May, the latest signal that the U.S. housing market may be improving in many regions following a slump of more than six years.

A recovery in the U.S. housing market is considered one of the key elements toward a stable and long-lasting economic recovery and it helped investors brush aside ongoing worries about Europe's debt crisis.

Japan's Nikkei 225 index rose 0.9 percent to 8,810.21 and Australia's S&P/ASX 200 gained 0.2 percent to 4,051.70. Benchmarks in Taiwan and Singapore also rose.

But Chinese shares fell. Hong Kong's Hang Seng was marginally lower at 19,166.82. On the mainland, the Shanghai Composite Index lost 0.3 percent to 2,210.92.

South Korea's Kospi fell 0.3 percent to 1,812.42.

Some analysts said the data was hardly robust and did not spell an end to the sluggishness of the U.S. economic recovery.

"Markets took a charitable view of yesterday's data. It was better than expected but frankly the bar was set low," analysts at DBS Bank Ltd. in Singapore said in a market commentary. "Treading water is good if sinking is the alternative."

The gains have come even though expectations for the European Union summit that starts Thursday are low. Many experts say the creation of a common eurobond is the answer to debt problems afflicting euro nations because it would help lower indebted countries' borrowing costs, easing the risk they may need a bailout. But Germany is reluctant to expose itself to new potential costs and is concerned that such bonds would ease the pressure on countries like Greece and Spain to reform their economies.

Though little is expected from the summit, some traders think the European Central Bank may take more aggressive action to ease the crisis, such as a third round of super-cheap long-term loans. The second round in December helped stabilize financial markets earlier this year.

On Wall Street, the Dow Jones industrial average closed up 0.7 percent at 12,627.01. The Standard & Poor's 500 index rose 0.9 percent to 1,331.85. The Nasdaq composite average rose 0.7 percent to 2,875.32.

Oil prices remained above the $80 a barrel mark as stocks recovered. Benchmark oil for August delivery was up 36 cents at $80.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 85 cents to close at $80.21 per barrel in New York on Wednesday.

In currencies, the euro rose to $1.2487 from $1.2459 in New York on Wednesday. The dollar fell to 79.45 yen from 79.75 yen.

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