Asian stocks rose for a fourth day on Wednesday as reports showed Chinese factory output jumped to a 19-month high in October, while the ailing U.S. dollar hovered near a 15-month low.
The Australian dollar slid briefly below US$0.93 as other data showed new loans from Chinese banks were halved compared with September, leading dealers to take profits just before the currency could retest its October highs.
Nevertheless, other indications of China's economy were within expectations and gave no sign that the recovery that has led the global economy is petering out.
China's recovery has extended into Q4 and this momentum looks set to continue into 2010, said Brian Jackson, strategist with Royal Bank of Canada in Hong Kong.
Growth is still heavily reliant on policy stimulus, easy liquidity and government-directed investment, but we expect to see stronger external demand in the months ahead.
In the near term, further gains in equities may be getting more difficult as the year end approaches and some investors look to take profits from this year's strong rally. Asian and global stocks had gained about 4 percent in the last week alone.
U.S. markets also struggled to build on gains overnight, mostly closing slightly lower. <.N>
The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> was up 0.4 percent on Wednesday, with the materials and consumer staples sectors outperforming, while Japan's Nikkei <.N225> rose 0.2 percent.
The Thomson Reuters index of regional shares <.TRXFLDAXPU> was down 0.15 percent.
Hong Kong's Hang Seng index <.HSI> rose 1.2 percent to within striking distance of its October high.
Shares of HSBC <0005.HK>
In currency markets, the U.S. dollar remained under pressure, though some analysts began to anticipate a corrective move higher as market participants begin to price in the fading effect of stimulus spending around the world.
The USD correction, when it happens, is likely to be particularly vicious versus the Australian dollar (AUD), New Zealand dollar (NZD), Canadian dollar (CAD), South African rand (ZAR), and Brazilian real (BRL) given market positioning and valuations, Standard Chartered strategists said in a note.
The ICE Futures U.S. dollar index <.DXY>, a measure of its value against six other major currencies, slipped 0.1 percent to its lowest since August 8.
The index is down 7.7 percent so far this year.
Oil edged above $79 a barrel, after dipping a day earlier, as signs of robust economic growth in China offset mildly bearish U.S. industry data showing surprise increases in crude and distillate stockpiles.
(Editing by Kim Coghill)