RTTNews - The markets across the Asia-Pacific region ended with slender gains on increasing optimism about economic recovery. Positive sentiment generated in the auto space following bankruptcy filing by General Motors and better-than-expected economic data offset to some extent the weakness triggered by the geopolitical tensions surrounding North Korea's belligerent stance on nuclear tests and profit taking ahead of the release of a few key U.S. economic reports later in the way.

In the U.S., a slew of positive economic data lifted the market sentiment on Monday. A report released by the Institute for Supply Management showed that the ISM index of activity in manufacturing sector rose to 42.8 in May from 40.1 in April, signaling a slower pace of contraction in activity in the manufacturing sector in the month of April. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.

A report released by the Commerce Department showed that construction spending unexpectedly increased in the month of April, reflecting a notable increase in spending on private construction. In a separate report, the Commerce Department stated that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.

The Dow closed up 221.11 points or 2.6% at 8,721, the Nasdaq finished up by 54.35 points or 3.1%, at 1,829, and the S&P 500 rose 23.73 points or 2.6% to 943.

The Nikkei 225 Average opened higher by nearly 100 points at 9,775 compared to its previous close at 9,678, mirroring the gains on Wall Street. However, the index trimmed some of the gains on short covering in early trading, although it could sustain the gains due to buoyancy among exporters, who benefited from a weaker yen.

Nevertheless, profit taking in late trading ahead of the release of key economic numbers in the U.S during the course of the week, trimmed the gains. The benchmark index finally ended the session at 9,704, up 26.56 points, or 0.27%. The broader Topix Index of all first section issues gained 1.04 points, or 0.10% to close at 914.

On the economic front, the Bank of Japan revealed that the monetary base in the country rose 7.9% year-over-year in May to 94.91 trillion yen, which was a tad lower than analysts' expectation for an 8% annual increase over April. Banknotes in circulation were up 1.1%, while coins in circulation eased 0.2%, the data revealed.

Crude oil prices ended weaker by $0.58 to $68.03 a barrel in Asian trading. Light crude oil price for July delivery closed at $68.58 in New York Mercantile Exchange on Monday on expectation of a rise in demand and weaker dollar.

In the export space, Canon gained 0.97% and Sony Corp. advanced 4.26%. Automakers also advanced, with Honda Motor gaining 2.17%, Toyota Motor adding 0.79% and Nissan Motor Co., moving up 1.71%.

Shipping stocks, which had rallied in recent sessions, declined on profit taking. Kawasaki Kisen lost 2.16%, Mitsui OSK Lines shed 2.92% and Nippon Yusen fell 1.67%.

Financial stocks ended mixed. Mitsuibishi UFJ gained 0.81%, and Mizuho Financial edged up 0.45%. However, Resona Holdings lost 0.75% and Sumitomo Mitsui shed 1.59%. Oil stocks also ended mixed. While Inpex, the leading oil exporter in the country, edged up 0.37%, Showa Shell lost 1.04% and Nippon Oil declined 1.52%.

Australia's All Ordinaries Index opened unchanged from its previous close at 3,888 and immediately surged past the psychological 3,900-mark, with resource stocks lending support. A decision by the RBA to leave interest rates unchanged as well as better-than-expected new building approvals data influenced market movement. The index finally ended the trading session near the day's high at 3,948, up 60.20 points, or 1.55%. The benchmark S&P/ASX 200 Index followed a similar trend and ended up at 3,955, with a gain of 60.30 points, or 1.56%.

On the economic front, the Australian Bureau of Statistics revealed that the number of houses and apartments approved for construction increased a seasonally adjusted 5.1% in April from the level of March. The Bureau noted that approvals for private sector homes were up a seasonally adjusted 7.2% month-over-month, but down 8.5% on year. In a separate report, the Bureau revealed that the net operating balance of the general government sector showed a deficit of A$7.7 billion in the March quarter, higher than the deficit of A$3.2 billion in the December quarter.

In another development, the Reserve Bank of Australia decided to leave its key interest rate unchanged as expected for the second consecutive month. Governor, Glenn Stevens said monetary policy has now eased significantly. Market and mortgage rates are at very low levels by historical standards and business loan rates stayed below average. Although much of the effects are yet to be realized, fiscal steps are supporting demand.

Resource stocks led the gains in the market on higher commodity prices. BHP Billiton advanced 2.69%, Iluka Resources rose 3.16%, Orica gained 5.75%, Oz Minerals added 4.44% and Rio Tinto increased 4.03%.

Among gold stocks, Sino Gold added 0.47%, and New crest Mining rose 0.47%. However Lihir Gold bucked the trend and shed 0.30%.

Woodside Petroleum gained 2.00%, Santos added 0.34% and Oil Search advanced 1.22%. In a statement, Woodside Petroleum stated that it is planning to retain at least 50% equity in the second and third stages of its Pluto LNG development at Karratha in Western Australia.

Banking stocks ended mixed following the decision of the RBA to leave interest unchanged. ANZ Bank slipped 1.30% and Westpac Banking lost 0.95%, but Commonwealth Bank added 0.47% and National Australia Bank gained 1.24%.

In Hong Kong, the Hang Seng Index ended sharply lower, as traders preferred to take profits following a recent rally. News that North Korea is planning to launch a medium-range missile also impacted trading despite the positive outlook for a global recovery.

The market opened slightly higher at 18,917 compared to its previous close at 18,889, mirroring the gains in Wall Street. However, the index slipped into negative territory, as traders preferred to take profits. Across the board selling was witnessed, with only 4 out of the 42 index components managing to end in positive territory.

PetroChina declined 3.6% CNOOC, the largest offshore oil company in China, slipped 1.6%, on profit taking.

Among financials, Industrial and Commercial Bank of China, or ICBC, shed 4.11% following news that Goldman Sachs sold its shares at a discount to raise HK$14.8 billion. HSBC Holdings lost 3.88% and Commercial Bank fell 3.46%. All other financial stocks also ended in negative territory.

China-related stocks also slipped into negative territory. China Mercantile Holdings lost 2.43%, China Resources fell 1.90% and China Shenhua ended lower by 1.10%.

In South Korea, the benchmark KOSPI Index ended in negative territory on geopolitical concerns following the news that North Korea is planning to test a medium range missile shortly. The buoyancy in the market on the positive closing on Wall Street and hopes of economic recovery fizzled out on the nuke threat and a late-day selling dragged the indices into red.

The benchmark KOSPI Index ended the session with a loss of 2.25 points or 0.16% at 1,413.

Mixed trading was witnessed among financial stocks. KB Financial, which controls Kookmin Bank, edged up 0.82%, but Shinhan Financial lost 2.30% and Woori Finance shed 2.98%.

Automotive stocks ended mixed following the news of GM filing for bankruptcy in the U.S. on Monday. While Hyundai Motor slipped 0.7%, Kia Motor advanced 1.64% and Ssangyong Motor edged up 0.54%.

Daewoo Engineering and Construction took the spotlight, with a gain in excess of 14% after parent company Kumho Asiana Group revealed that it would sell the unit if it could not find new investors before the end of July.

In India, the stock market ended in positive territory amid volatile trading.

The BSE Sensex ended at 14,875 with a gain of 34.28 points, or 0.23%, while the broader Nifty shed 4.65 points or 0.10% to close at 4525.

Among the other major markets in the region, China's Shanghai Composite Index added 3.02 points, or 0.11% to close at 2,724, and Indonesia's Jakarta Composite Index ended flat at 1,999 with a gain of 0.06 points. However, the Strait Times Index in Singapore shed 4.25 points or 0.18% to close down at 2,376 and the Taiwan Weighted Index edged down 5.02 points, or 0.07% to close at 6,949.

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