Volkswacht Bodensee - Asian, European markets rise as China data spurs recovery hopes

The forecast-busting reading on manufacturing -- the highest since 2012 -- reinforced the view that the world's second-biggest economy will bounce back strongly from last year's slow growth, as businesses start up and people travel again.

It also provided a much-needed boost for markets after a tumultuous month that wiped out much of January's gains as traders came around to the idea that central banks will need to lift interest rates higher for longer as they struggle to bring inflation under control.

While there were "significant seasonal and event factors" behind the latest data, the "overall trend still points to a solid recovery at the beginning of 2023", Zhou Hao, of Guotai Junan International, said.

A better-than-expected report on China's non-manufacturing gauge -- which includes services and construction -- added to the positivity.

Eyes are on a high-level meeting in Beijing where officials will set their annual economic growth target and lay out plans to achieve it including possible stimulus measures.

The government's goal "should be in the range of 5.5-6 percent", said Iris Pang at ING.

"This will not be easy for the government to achieve even though China is gradually recovering. The challenge will come from the weakening external market, which could affect exports and manufacturing activity related to exports."

Hong Kong led gains, piling on more than four percent in its best performance since early December.

The surge came after it fell for the previous six trading days, and was fuelled by a rally in heavyweight tech firms including Tencent and Alibaba.

Tokyo, Shanghai, Singapore, Manila, Bangkok, Mumbai, Taipei and Jakarta were also in the green but Wellington and Sydney edged down.

London, Paris and Frankfurt rallied out of the blocks.

- Rate worries persist -

However, while there is a lighter mood on trading floors at the moment, the prospect of rising interest rates continues to cast a shadow, keeping any equity rally in check.

Blockbuster jobs figures and disappointing inflation readings last month showed the Federal Reserve still had much more work to do in fighting prices, while several officials have warned as much.

Now investors expect it to lift rates at least three more times and hold them at around 5.4 percent -- from the current 4.5-4.75 percent -- into 2024.

That is causing plenty of angst over the outlook for the economy and company profits -- particularly tech firms that rely on borrowing -- leading to warnings from analysts.

"While the Fed is still raising rates, there's going to be nervous and jittery markets. And so we do expect choppy markets over the next three months or so," Loreen Gilbert, of WealthWise Financial Services, told Bloomberg Television.

All three main indexes on Wall Street fell, partially weighed by news that US consumer confidence unexpectedly fell in February owing to rising prices and worries over the economy.

Rate worries were also growing in Europe after news that inflation had picked up in Spain and France last month, while investors are now betting on European Central Bank borrowing costs to peak at four percent, compared with the current 2.5-3.25 percent.

The better-than-expected China data gave oil prices a boost as traders eyed a pick-up in demand from the world's biggest importer of the commodity.

That helped offset concerns about a possible recession caused by rising interest rates.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: UP 0.3 percent at 27,516.53 (close)

Hong Kong - Hang Seng Index: UP 4.2 percent at 20,619.71 (close)

Shanghai - Composite: UP 1.0 percent at 3,312.35 (close)

London - FTSE 100: UP 0.4 percent at 7,910.20

Pound/dollar: UP at $1.2078 from $1.2013 on Tuesday

Euro/pound: UP at 88.03 pence from 88.01 pence

Euro/dollar: UP at $1.0632 from $1.0583

Dollar/yen: DOWN at 136.00 yen from 136.13 yen

West Texas Intermediate: UP 0.5 percent at $77.41 per barrel

Brent North Sea crude: UP 0.5 percent at $83.85 per barrel

New York - Dow: DOWN 0.7 percent at 32,656.70 (close)

Y.Bouchard--BTB