* Asian shares start year cautiously, Nikkei still shut
* China manufacturing index dips to 51, missing forecasts
* Yen falls anew, dollar near highest in over five years
By Wayne Cole
SYDNEY, Jan 2 Asian markets got the new year off
to a sluggish start as Chinese economic data disappointed ahead
of a raft of reports on global manufacturing due out through the
The early action was in currencies, where the yen resumed
its long decline as investors used it to fund purchases of
higher-yielding assets abroad.
The drop in the yen has been viewed as positive for Japanese
exports and corporate earnings, and a major reason its share
markets outperformed all others last year.
Japan's Nikkei will be closed on Thursday and
Friday. The index ended 2013 with an annual gain of 57 percent,
and many analysts look for a further advance this year as the
Bank of Japan remains committed to its massive stimulus
Nomura's global strategy team is forecasting that Japanese
equities will provide the greatest return of all global stocks
in 2014, thanks in large part to rising corporate earnings.
They see the Nikkei at 18,000 by the end of this year, up
from the current 16,291, and said even 25,000 was possible by
2018 should Prime Minister Shinzo Abe's aggressive economic
program prove successful in defeating deflation.
Asian markets outside of Japan had a much more mixed
performance in 2013, partly because investors rediscovered the
attractions of assets in Europe and the United States.
MSCI's broadest index of Asia-Pacific shares outside Japan
ended last year essentially flat, and early on
Thursday it was off 0.15 percent.
Not helping was a drop in China's official Purchasing
Managers' Index (PMI) to 51.0 in December, from 51.4 the
previous month and below forecasts for 51.2.
Analysts at Barclays noted the pullback of activity in the
survey was broadbased across industry sectors and sizes.
"Besides the need for deepening reforms and addressing
structural issues such as reducing overcapacity and controlling
local government debt, we think elevated interest rates across
the money, bond and credit markets have led to higher funding
costs, hurt corporate sentiment and thus weigh on economic
growth," they wrote in a client note.
They expected China's central bank to maintain its
tightening bias for a while yet.
HSBC and Markit release their measure of manufacturing
activity later on Thursday and that has also been pointing to
some slowdown in growth.
A whole slew of manufacturing indices for Europe and the
U.S. are due out across Thursday which will offer a better idea
of how global industry was faring into the end of the year.
Markets reacted to the China data by knocking the Australian
dollar down a quarter of a U.S. cent. China is
Australia's single biggest export market and the currency is
often used as a liquid proxy for risk in the Asian giant.
For other major currencies the main themes continued to be
weakness in the yen and resilience in the euro.
The single currency was up at 144.97 yen having
clocked up gains of 26 percent over 2013 to reach a five-year
peak of 145.67. The dollar was likewise firm at 105.38 yen
having climbed 21 percent last year.
The euro was a shade softer on the dollar at $1.3754,
but still not far from its recent two-year peak of $1.3892.
Dealers suspect the single currency has been supported by
the repatriation of funds by European banks and a large and
expanding current account surplus in the euro zone.
But there remains a general assumption rising U.S. Treasury
yields will eventually lift the dollar up on the euro. Yields on
U.S. 10-year paper are up at two-and-a-half year highs of 3.03
percent. Even shorter-dated rates have been rising as improving
U.S. economic data justifies the Federal Reserve's decision to
start tapering its asset-buying stimulus.
Outgoing Fed Chairman Ben Bernanke is giving a speech on
Friday and may offer more guidance on the outlook for tapering.
In commodity markets, gold remained on the defensive at
$1,204.49 an ounce, having suffered its biggest annual
loss in three decades last year.
U.S. oil Futures were trading 28 cents higher on
Thursday at $98.67 a barrel.