China inflation pushes most Asian markets lower

HONG KONG: Investors Thursday picked up bargain stocks, lifting most markets into the black after they sank earlier in the day when China revealed consumer prices had jumped in February.

Trade had also been weighed by news that the Japanese economy did not grow as much as previously thought in the final quarter of 2009.

China''s National Bureau of Statistics said the consumer price index, the main gauge of inflation, rose 2.7 percent year-on-year last month, faster than the 1.5 percent rise recorded in January.

The news led Chinese and Hong Kong markets lower before they rebounded thanks to dealers buying up cheap stocks.

Hong Kong rose 19.91 points to close at 21,228.20 while the Shanghai Composite Index, which covers both A and B shares, added 2.35 points to 3,051.28.

Data also showed new lending slowed to 700.1 billion yuan (102 billion dollars) in February, from the previous month''s 1.39 trillion yuan as Beijing tries to restrict liquidity in a bid to put the brakes on the economy.

The figures have caused concern there will be further restrictions.

"While we continue to believe that policy normalisation/tightening should be gradual and measured this year, another reserve requirement ratio hike is likely imminent," Morgan Stanley analyst Wang Qing told Dow Jones Newswires.

China has taken steps to calm inflationary pressures by ordering banks to increase their capital reserves three times since December -- effectively limiting the amount of money they can lend.

And Qian Qimin from Shenyin Wanguo Securities said: "The tightening concerns are still lingering."

Sydney closed 0.12 percent, or 5.8 points, at 4,814.2 after data showed unemployment rose to 5.3 percent in February from January''s revised 5.2 percent.

BHP Billiton eased 0.53 percent to 43.01 Australian dollars, while Rio Tinto edged up 0.27 percent to 75.55.

Seoul closed 0.34 percent, or 5.62 points, lower at 1,656.62 after South Korea''s central bank held the key interest rate at a record low 2.0 percent for a 13th straight month.

Markets broadly ignored upbeat US data showing wholesale inventories unexpectedly fell 0.2 percent in January. Analysts expected inventories to rise 0.2 percent.

The government report also said sales by US wholesalers in January rose 1.3 percent to a seasonally adjusted 346.7 billion dollars.

Despite data showing Japan''s economy grew 0.9 percent in October-December from the previous quarter, down from an initial estimate of 1.1 percent, the Nikkei picked up due to a weaker yen.

Tokyo rose 0.96 percent, or 101.03 points, to 10,664.95

Exporters got a boost from a weaker yen in New York trade on Wednesday.

Sony advanced 1.9 percent to 3,440 yen and Honda rose 0.77 percent to 3,270 yen.

The dollar had jumped to 90.49 yen in New York late Wednesday from 89.96. However, it retreated slightly in Asia to 90.35.

The euro rose to 1.3646 dollars in afternoon trade after Beijing released the figures, rebounding from earlier lows, although it was still down from its level of 1.3657 in New York late Wednesday.

The euro declined to 123.29 yen from 123.60.

The Reserve Bank of New Zealand kept its rate unchanged, but signalled the first rise was likely mid-year. Thailand kept its rates steady Wednesday citing political uncertainty.

Oil was lower, with New York''s main contract, light sweet crude for April delivery, 53 cents down at 81.56 dollars a barrel.

London''s Brent North Sea crude fell 49 cents to 79.99 dollars.

Gold closed at 1,107.00-1,108.99 US dollars an ounce in Hong Kong, down from Wednesday''s close of 1,122.00-1,123.00.