Asian shares edge up; RBA minutes lift Aussie

By Lisa Twaronite

TOKYO (Reuters) - Asian shares inched higher on Tuesday, taking their cue from U.S. stocks after weaker-than-forecast U.S. retail sales growth backed the view that the Federal Reserve will hold off reducing its bond-buying stimulus anytime soon.

European stocks are seen opening steady, consolidating a sharp upward move over the last three weeks, with traders looking to closely watched German ZEW sentiment index for direction. The index is seen rising to 39.6, which would indicate a third straight month of growing confidence in the euro zone's biggest economy.

Financial spreadbetters expect Britain's FTSE 100 <.ftse> to open 4 points lower, or as much as 0.1 percent, Germany's DAX <.gdaxi> to open 6 to 7 points lower, or flat, and France's CAC 40 <.fchi> to open 3 points lower, or as much as 0.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> added about 0.2 percent, while the U.S. dollar index edged lower.

The Australian dollar surged half a U.S. cent after the Reserve Bank of Australia said in the minutes of its July policy meeting that the current policy stance was appropriate for the time being.

The meeting had left the cash rate unchanged at a record-low 2.75 percent, and the market interpreted the minutes as showing less urgency to cut rates further than some investors had anticipated.

China shares slid, weighing on Hong Kong as both markets traded narrowly, with financial and property stocks dampened by an official news report saying quarterly or annual growth of below 7 percent was acceptable. Data on Monday showed that China's second-quarter economic growth cooled to 7.5 percent from the year-earlier period from 7.7 percent in January-March, in line with expectations.

"If it's true that 7 percent is the new base economic growth case, then it would greatly diminish chances that Beijing will even move to support the economy and this is a negative for the market," said Cao Xuefeng, a Chengdu-based analyst with Huaxi Securities.

BERNANKE TESTIMONY AWAITED

Investors await Fed Chairman Ben Bernanke's twice-yearly monetary policy report to the Congress on Wednesday and Thursday for more clues on the U.S. central bank's policy outlook.

"The testimony is a venue to explain the Fed board's thinking, rather than Bernanke's own ideas. So I would expect his remarks to be a bit more hawkish than last week," said Minori Uchida, chief currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

The Nikkei share average <.n225>, which touched a 7-1/2 week high, was up 0.5 percent, catching up after Japanese financial markets were closed for a public holiday on Monday.

Citigroup's strong earnings helped the S&P 500 <.spx> end higher on Monday for an eighth straight day, the longest such streak since mid-January. The S&P 500 and the Dow Jones industrial average <.dji> both closed at record highs on Monday for the third consecutive session. Data on Monday showed that U.S. retail sales increased 0.4 percent last month, half of the rise that economists polled by Reuters had forecast. The slowdown prompted economists to downgrade their second-quarter growth forecasts to an anaemic 1 percent increase.

While the Fed is focusing on labor market improvements to determine when to begin tapering its $85 billion in monthly purchases, weakness in the consumer sector could indicate broader economic problems.

A separate report on Monday showed that growth in New York state's manufacturing sector accelerated in July.

Yields on U.S. benchmark 10-year Treasury notes rose to 2.555 percent, above their U.S. close of 2.543 percent, but still well below a two-year high of 2.76 percent touched on July 8.

The dollar index <.dxy> erased early gains and was down about 0.1 percent at 82.964, but still far from last week's two-week low of 82.418. The index set a three-year high of 84.753 last Tuesday.

The dollar edged down 0.1 percent against the yen to 99.76 yen, well below last week's high of 101.21 yen on Wednesday.

The yen could face more pressure as the week progresses, due to expectations that Japan's upper house election on Sunday will result in a big victory for the ruling party of Prime Minister Shinzo Abe, giving him more support to pursue his aggressively reflationary policies.

The euro rose to $1.3083, but was still well shy of last week's three-week high of $1.3201.

The Australian dollar surged about 1.0 percent to $0.9181, taking back lost ground after it fell below 90 U.S. cents on Friday on fears that the China GDP data would fall short of expectations. China is Australia's single biggest export market.

Commodity markets were mixed in the wake of the Chinese data, relieved growth did not disappoint but finding no fresh buying incentives.

Copper added 0.7 percent to $6,969.25 a tonne, while U.S. crude slipped 0.2 percent to $106.12 a barrel.

Spot gold fell 0.2 percent to $1,279.25 an ounce, after falling slightly on Monday.

(Additional reporting by Clement Tan in Hong Kong and Hideyuki Sano in Tokyo; Editing by Simon Cameron-Moore)

Source: http://news.yahoo.com/asian-shares-gain-rba-minutes-awaited-004124252.html

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