Business Blog Posts

London copper futures rallied to a record high after lower than expected consumer price figures from China soothed concerns that Beijing might adopt a more aggressive monetary tightening regime to fight inflation.

Chinese consumer price inflation accelerated to 4.9 percent in the year to January. It matched the widespread figure that swirled through markets on Monday, but was below the earlier consensus forecast of 5.3 percent.

Analysts remained wary of a build-up in China's price pressures, saying Beijing could raise interest rates further, given continued rises in food prices.

"The data probably slightly eased expectations of immediate tightening, although in the overall scheme of things, this doesn't change the fact that China is still in a tightening phase," said Etsuko Yamashita, chief economist at SMBC.

MSCI's Asia Pacific index excluding Japan .MIAPJ0000PUS, which snapped five straight sessions of losses on Monday, was up 0.08 percent.

The Shanghai stock market .SSEC rose more than 1 percent by 0540 GMT, compared with a rise of 0.38 percent before the Chinese inflation data came out. On Monday, it jumped 2.5 percent on market rumors of the inflation data.

Japanese stocks .N225 edged higher to log a 10-month closing high. The Nikkei average ended up 0.20 percent at 10,746.67. .T

South Korea's KOSPI .KS11 gave up some initial gains, weighed by falls in automakers including Hyundai Motor (005380.KS), while Hong Kong stocks .HSI fell 0.45 percent.

EURO INCHES UP, BUT TREND WEAK

In the currency market, the euro edged up 0.24 percent to around $1.3520, after falling as low as $1.3426 overnight, as traders tried to take out stop-loss orders.

But uncertainty remained over concrete solutions to Europe's fiscal problems, keeping the euro vulnerable. Worries about rescue plans for ailing German lender WestLB have also added to the single currency's struggle.

On Monday, euro zone finance ministers agreed that a permanent rescue mechanism, the European Stability Mechanism, to be set up from 2013, would total 500 billion euros, but are waiting for leaders' guidance to agree changes to the existing bailout fund.

Traders are also focusing on U.S. retail sales data for clues on the dollar's near-term outlook. The figures, due later in the day, are expected to show a 0.6 percent rise in January from the previous month.

"The greenback may regain its footing over the next 24 hours of trading as the economic docket is expected to reinforce an improved outlook for future growth," said David Song, currency analyst at DailyFX.