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* Sentiment index rises to 74 in Q2 from 64 in Q1
* Global economic uncertainty continues to remain biggest risk
* Philippines, India most upbeat with Thailand a close second
* South Korea and Japan outlooks falter
* Resource sector most positive, finance and retail fall
By Adam Jourdan
SHANGHAI, June 18 (Reuters) - Business sentiment among Asia's top companies hit its highest level in more than two years in the second quarter of 2014, rising sharply on supportive political changes around the region and positive signs from China, a ThomsonReuters/INSEAD survey showed.
The ThomsonReuters/INSEAD Asia Business Sentiment Index jumped to 74 in the second quarter from 64 in the first, the highest reading since the start of 2012. A reading above 50 indicates an overall positive outlook.
Leadership change gave India and Thailand sorely-needed shots in the arm, with the two key markets powering a rise in the wider index. Robust scores from China and Australia also helped lift the index with scores of 67 and 79 respectively, both up significantly from the previous quarter.
Export-driven South Korea saw a steep drop to 50 from 67 in the first quarter on weaker trade and consumer data. Japan and Malaysia edged down slightly, while Singapore and the Philippines held flat, although the Philippines still maintained its 100 reading, the same as in the first quarter.
"At the moment, stronger U.S. growth, China providing some support to prevent collapse and the India story is still there. These are positives," said Anthony Chan, senior economist for Asia at asset management firm AllianceBernstein.
However, the sentiment spike may be short-lived. India is due a "reality check" after its election boost, China's stimulus will create only a short-term lift, and there is still plenty hanging "in the balance" for Thailand after the military coup there in May, Chan said.
The index surveyed 200 of the Asia-Pacific region's top companies in 11 economies across sectors from property, to financials and tech. Companies included Japanese clothes maker Fast Retailing, Korea's Hyundai Heavy Industries and Australian construction materials firm James Hardie Industries Plc.
The poll, conducted by ThomsonReuters in association with INSEAD, a global management and business school, was compiled in June 2-13. It showed global economic worries, rising costs and other risks including political and regulatory uncertainty were the key business concerns.
Of the 124 companies that responded 52.42 percent said they had a neutral outlook and 47.58 percent said they had a positive outlook in the second quarter of 2014. None reported a negative outlook, the first time ever in the survey's history.
Positive trends for key trade partners gave Asia a boost, said Simon Shakesheff, Sydney-based group executive for strategy and stakeholder relations at Australian property group Stockland Corp Ltd.
"Business confidence has been buoyed by a broad improvement in the global environment, especially some increased optimism with regards to the outcome of Europe, the U.S. looking quite respectable and Japan travelling better than expected," he said.
Political changes around Asia sparked a positive mood in the countries affected with all 10 companies surveyed from India and the majority in Thailand reporting a positive outlook.
This helped Asia's third-largest economy hit the maximum score of 100 after pro-business candidate Narendra Modi stormed to victory in India's general election in May.
"India is positive because the previous government has done such a poor job that everyone expects it can only improve," said Dariusz Kowalczyk, Hong Kong-based senior economist for Asia ex-Japan at Credit Agricole, pointing to Modi's strong majority in parliament and wide popular support.
"This will make it easier for him to push through reform and therefore business sentiment improved."
A military coup in May helped Thailand, Southeast Asia's second-largest economy, rebound strongly to 91 after months of anti-government protests had dragged the country's score down to negative territory since the end of last year.
The army said it would end political unrest and revive the country's flagging economy, boosting business and consumer sentiment. Thai consumer confidence rebounded last month for the first time in over a year.
Corporate sentiment in Malaysia sank to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100. No companies from Indonesia responded to this quarter's survey.
China, Asia's largest economy, posted a score of 67, bouncing back from a score of 50 in the quarter before as Beijing's "mini-stimulus" package promised to help the country shift smoothly into slower gear and hit its growth targets for the year.
"The slowdown in China that we saw in Q1 has not extended into Q2 and things seem to have stabilised," said Julian Evans-Pritchard, China economist at Capital Economics.
"There's quite a lot of relief that the government has stepped in to shore up growth and offset some of the weakness that we've seen in the property sector."
RESOURCES UP, FINANCIALS DOWN
Region-wide, resources was the strongest sector with a reading of 80 marking a three-year high. The property sector was just behind, climbing to 79 from 75 the previous quarter.
The shipping, food and building sectors tied for third with readings of 75. In the building sector half of the companies reported a positive outlook, helping drive a steep rise from its score of 50 in the first quarter.
"Our main regions are currently experiencing strong housing construction markets," said Sean O'Sullivan, vice president of investor and media relations at James Hardie, pointing to relatively low interest rates, strong employment markets and robust broader economic conditions. The firm's key regions in Asia are Australia, New Zealand the Philippines.
The weakest sectors were financials and retail. Financials dropped to 60 from 64 the previous quarter, while rising costs dragged retail down to 69 from 75. Autos also posted a relatively weak score of 67, although this was up sharply from 50 in the first quarter. (Additional reporting by Aditi Shah in New Delhi; Editing by Matt Driskill)