* Shanghai composite index leaps 7 pct, pulling Asia up
* MSCI world stocks index hits 23-month low overnight
* Oil, metals edge up as U.S. dollar struggles
(Updates prices, adds European outlook)
By Kevin Plumberg
HONG KONG, Aug 20 (Reuters) - Most Asian stock markets
edged up on Wednesday, recovering from a two-year low as
Chinese shares surged on hopes Beijing would introduce a
stimulus package to jumpstart growth, though many analysts said
it was a long shot.
European equities were expected to open slightly higher,
according to financial bookmakers, with energy stocks seen
benefiting from a rise in oil prices.
The dollar struggled as crude oil crept above $115 a barrel
and gold prices rose, taking some of the steam out of the U.S.
currency's recent surge to a seven-month high.
On Tuesday, the MSCI all-country world equities index
<.MIWD0000PUS> slid to the lowest since September 2006.
Investors are increasingly sceptical about corporate earnings
for 2009, given the mixed results so far in 2008 and constant
reminders about instability in the financial sector.
However, most Asian indexes turned higher as cheap
valuations proved irresistible, especially with markets rife
with chatter about fiscal stimulus in China.
"Bargain hunters have returned to the market on talks that
a rescue package is on the way," said Francis Lun, general
manager from Fulbright Securities in Hong Kong. "We are all
waiting for a miracle," Lun added.
Hong Kong's Hang Seng index <> rose 1.6 percent after
closing at a one-year low on Tuesday, with shares of China
Mobile <0941.HK> providing the biggest boost.
Shares of Asia's largest wireless carrier, rose 2 percent,
recovering from a one-year low.
The Shanghai composite index <> jumped 7.4 percent
after touching a 20-month low on Tuesday. The index is watched
by many global investors as a gauge of risk taking and a
leading indicator for the world's fastest growing economy.
The MSCI pan-Asia equities index <.MIAS00000PUS> edged up
0.2 percent after earlier plumbing the lowest since July 2006,
while the Asia-Pacific ex-Japan index <.MIAPJ00000PUS> 1.25
percent.
Japan's Nikkei share average <> slipped 0.1 percent,
in a choppy session with shares of exporters such as Canon Inc
<7751.T> ultimately dragging the index down.
TOO EARLY FOR CHINA FISCAL STIMULUS?
Despite the sudden turnaround in Asian stocks, apprehension
about the earnings outlook remained, especially after the Bank
of Japan on Tuesday described the world's second-largest
economy as "sluggish" -- a term it has not used since the Asian
financial crisis a decade ago.
Donald Straszheim, vice chairman of Roth Capital Partners
in Los Angeles and a long-time China analyst, said the Chinese
stock market, the worst performer this year, will continue to
fall because of the toxic concoction of slowing growth and high
inflation.
He expects earnings to rise 15 percent in China this year,
down from the 30 percent to 45 percent pace enjoyed by most
sectors in 2006 and 2007.
"Shanghai has proven to be a very emotional market, and is
likely to stay that way," Straszheim said in a note to clients.
Stephen Green, head of China research with Standard
Chartered Bank, said that given economic growth is still
expected to stay above 8 percent this year and next, it was too
early for the government to squeeze its budget to boost growth.
Rather, Beijing should consider relaxing loan quotas to
stimulate bank lending to support growth, he said.
"It is too early for a fiscal stimulus package, and we
should be responsible about calling for one," he said in a
note. "There is still room for monetary policy before we try
fiscal policy."
Though slowing export demand in China has pulled down
overall growth this year, authorities there continue to push
the country's economy to depend less on foreign trade and more
on domestic consumption, which has been buoyant despite high
inflation, market downturns and natural disasters.
After weeks of liquidation of positions in the metals
markets, which have helped to push up the U.S. dollar,
investors slowed down to survey the scene.
The euro slipped 0.15 percent to $1.4761 <EUR=>, but was up
from a six-month low around $1.4630 hit on Tuesday. The dollar
rose 0.3 percent to 109.93 yen <JPY=>, though it was struggling
to test a seven-month high of 110.67 yen reached last week.
Metals markets were relatively quiet compared with the last
few days. Gold rose 0.4 percent in the spot market to $816 an
ounce <XAU=>, spending only a few days trading below $800.
The September U.S. light crude contract <CLc1> rose 40
cents to $114.95 a barrel, gravitating around the $115 mark
throughout the session.
