Asian markets advance after likelihood of attack against Syria fades

BANGKOK: Asian stock markets advanced Tuesday after the likelihood of an imminent U.S.-led attack against Syria faded and manufacturing rebounded in China and parts of Europe.

President Barack Obama has faced difficulty trying to amass support for U.S. military intervention in Syria, where an alleged chemical attack by government forces killed scores of civilians outside of Damascus. Britain’s parliament voted against involvement, and Russia and China have been critical of the idea.

Obama announced over the weekend that he would seek approval from Congress for military strikes, but he faced skepticism among many U.S. lawmakers about the intelligence regarding the chemical attack and the value of an intervention to United States interests.

“To be sure, a Syria strike no longer being imminent is reason for relief but that doesn’t mean that Syria has dropped off the geo-politics radar,” said Vishnu Varathan of Mizuho Bank Ltd. in Singapore.

Japan’s Nikkei 225 index jumped 2.4% to 13,900.59. South Korea’s Kospi rose 0.4% to 1,931.99. Australia’s S&P ASX/200 added 0.1% to 5,193.10.

Hong Kong’s Hang Seng advanced 1.1% to 22,410.31, with big paper companies getting a boost after the Chinese government said the paper industry suffered from overcapacity. That is an indication that there will be efforts to eliminate smaller companies in favor of bigger ones, said Jackson Wong, vice president of Tanrich Securities in Hong Kong.

Nine Dragons Paper jumped more than 13% in Hong Kong. Lee & Man Paper surged nearly 9%.

Sentiment was boosted Monday by two surveys that showed China’s manufacturing sector improved last month after prolonged weakness.

The HSBC purchasing managers’ index rose to 50.1 points in August, a level that indicates expansion as output and new orders edged up slightly and order backlogs rose at the fastest pace in two years. The official China Federation of Logistics and Purchasing PMI rose to 51.0 from July’s 50.3, which was the highest level and biggest increase this year.

Both indexes use a 100-point scale on which numbers below 50 indicate a contraction.

“With improved Chinese economic data, the focus is shifting back to the Chinese economy,” Wong said.

Traders will be waiting for Wall Street to reopen later Tuesday after a three-day Labor Day weekend as well as the latest data from the Institute for Supply Management on U.S. manufacturing for August.

On Monday, Britain’s FTSE 100 gained 1.5% to close at 6,506.19, thanks to cell phone company Vodafone, which said it was with in talks with Verizon to sell its U.S. mobile business. Confirmation of the $130 billion deal came after trading in London had finished for the day, but Vodafone’s shares closed up 3.4% on expectations of the purchase.

Germany’s DAX index ended the day up 1.7% to 8,243.87 while France’s CAC-40 jumped 1.8% to 4,006.01. Italian and Spanish stocks were also up after surveys showed manufacturing activity rose in the two countries, which are in recession and have been focal points of Europe’s debt crisis.

Benchmark crude for October delivery was down $1.03 to $106.62 a barrel in electronic trading on the New York Mercantile Exchange as fears of military strikes on Syria continued to fade. The contract fell $1.15 to close at $107.65 on Friday.

In currencies, the euro rose to $1.3193 from $1.3187 late Monday. The dollar fell to 99.34 yen from 99.56 yen.

In the other hand, oil prices fell further Tuesday as President Barack Obama’s struggle to win support for U.S. military intervention in Syria diminished expectations of an attack.

Benchmark crude for October delivery was down 95 cents to $106.70 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $1.15 to close at $107.65 on Friday.

While Syria is not a major oil producer, it straddles a region that is. The possibility of a wider conflict, one that could interrupt production and shipping routes in the region, has pushed oil prices higher in recent days. Conversely, prices have slid as the prospect of a U.S. attack diminished.

Brent, the benchmark for international crudes, was down 12 cents to $114.21 a barrel on the ICE Futures exchange in London.

“The upside to Brent oil prices has been tempered somewhat by the diminished expectation of a US military strike, though they haven’t fallen as much as US prices which have slid back much more sharply,” Michael Hewson, senior market analyst at CMC Markets, said in a commentary.

In other energy futures trading on Nymex:

— Wholesale gasoline was down 1.2 cents to $2.878 per gallon.

— Heating oil was nearly unchanged at $3.137 per gallon.

— Natural gas rose 8 cents to $3.661 per 1,000 cubic feet.

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