* Technology sector shares rise to highest since August
2008
* China warns banks against end-of-month lending rush
* Australia dollar rises on bets for October rate hike
* Commodities rise, LME copper up 2.4 percent
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Aug 28 (Reuters) - Most Asian share markets
edged up on Friday, led by technology shares as confidence in a
sustainable recovery grew, though stocks in Shanghai bucked the
trend and dropped 3 percent on worries banks will cut lending.
Major European stock futures rose 0.7 percent <STXEc1>,
indicating a higher open, after Wall Street gained and Japan's
stocks ended higher. U.S. stock futures <SPc1> were largely
unchanged on the day.
Data overnight showed the U.S. economic contraction in the
second quarter was not as bad as expected, and gross domestic
product actually grew if inventories were stripped out, raising
hopes that pent-up demand for Asia's exports would return
slowly. []
Bullish economic data in Australia drove dealers to move
forward expectations to October for a rate increase from the
Reserve Bank of Australia, lifting the Australian dollar a
second day and knocking bond futures.
Stocks of companies involved in making parts for technology
exports, such as Shin-Etsu Chemical in Japan <4063.T> and
Taiwan Semiconductor <2330.TW>, gave a boost to their domestic
indices. Shin-Etsu rose more than 2 percent.
Japan's Nikkei share average <> finished up 0.6
percent, just below the highest intraday level since Oct 6,
which was hit on Wednesday. Shares of Kyocera <6971.T> and
Canon Inc <7751.T> were among the biggest supports to the
index.
Japanese stock market gains came despite a record decline
in core consumer prices and an all-time high in the domestic
jobless rate. Some analysts looked towards this weekend's
elections and a likely win by the opposition.
"All these negative trends can be turned around if DPJ does
win Sunday elections, inspires confidence, and successfully
implements its plans to boost domestic consumption," said
Dariusz Kowalczyk, chief investment strategist with SJS Markets
in Hong Kong in a note.
The MSCI index of Asia Pacific stocks outside Japan rose
0.8 percent <.MIAPJ0000PUS>, near the top of a range maintained
in August. However, the technology sector index for the region
rose 1.5 percent <.MIAPJIT00PUS> to the highest in 12 months.
Like many other major indexes, the MSCI ex-Japan has lost
steam in recent weeks after a strong run-up from March lows,
with investors taking profits on fears that markets have run
too far ahead of economic funamentals and may be due for a
correction.
Still, the MSCI ex-Japan index is up around 47 percent so
far this year.
Hong Kong's Hang Seng index <> underperformed the
region, slipping 0.5 percent, dragged down by Shanghai stocks
<>, which fell as much as 3 percent before paring some
losses. []
China's banking regulator has given Chinese banks verbal
instructions that they must not rush into end-of-the-month
lending as the close of August draws near, bankers at several
Chinese banks told Reuters on Friday.
Banking sources told Reuters that Chinese banks had only
lent around 200 billion yuan ($29 billion) so far this month,
with the biggest four state-owned banks lending around 100
billion yuan.
China's banks lent more than 1 trillion yuan in the first
half of the year, some of which was related to
government-directed projects and some of which likely found its
way into the equity market, adding fuel to Shanghai's rally.
Despite declines on Thursday in Asian and European stocks,
Wall Street posted small gains, thanks to strength in the
energy sector. That helped Asian markets gain momentum early in
the session.
While the global equity rally has sputtered a bit in
August, investors have been steadily putting their piles of
cash to work.
Money market funds, a cash equivalent, saw a net outflow of
$5.75 billion in the latest week, bringing year-to-date
redemptions to around $250 billion, about half of what was
committed in 2008 to these funds, fund tracker EPFR Global said
in a note.
In the week to Wednesday, all equity funds tracked by EPFR
took in a net $7.32 billion and fixed income funds saw net
inflows of $4.59 billion.
CURRENCIES
The Australian dollar <AUD=> rose 0.2 percent to US$0.8396
after a 1.6 percent climb overnight, remaining around a cent
from an 11-month high around US$0.8480 reached two weeks ago.
A steady flow of solid economic data has led dealers to
price in at least one quarter percentage point rise in the
Reserve Bank of Australia's base rate by November and speculate
on a possible move in October <RBAWATCH>.
"The data from Australia has been pretty strong, suggesting
the economy has a fair bit of momentum," said John
Kyriakopoulos, currency strategist at National Australia Bank.
"Interest rate markets are now bringing forward the prospects
of a rate hike to as early as October and that is helping the
Aussie."
The ICE Futures U.S. dollar index <.DXY> edged up 0.2
percent, though a 0.7 percent decline overnight kept it in a
downward trend.
U.S. crude for October delivery rose 16 cents to $72.65 a
barrel <CLc1> after jumping $1.06 on Thursday.
U.S. economic data released on Wednesday was a shot in the
arm and helped confidence that energy demand will recover
further, overshadowing reports showing an increase in
inventories.
Metals prices also reflected optimism about the demand for
raw materials. Three-month copper on the London Metals Exchange
was up 2.4 percent to $6,420 a tonne <MCU3>, on track for a
seventh weekly increase.
(Additional reporting by Anirban Nag in SYDNEY and Claire
Zhang and Edmund Klamann in SHANGHAI)
(Editing by Kim Coghill)
