* Nikkei bounces as Wall St proves resilient to poor US GDP
* Fed keeps upbeat outlook, investors give it benefit of
* China data to test nerves, though much of region on
By Wayne Cole
SYDNEY, May 1 Share markets edged higher on
Thursday as investors wagered the U.S. economy was on the mend
after a shockingly weak start to the year, yet a drop in both
the dollar and Treasury yields suggested not everyone was
Asian markets also have their doubts about the Chinese
economy which will be tested when the official measure of
manufacturing activity (PMI) is released at 0100 GMT.
Forecasts are for the PMI to edge up to 50.5 in April, from
50.3 in March, and any miss would only add to concerns the
economy was stumbling, absent the sort of significant stimulus
that Beijing seems reluctant to undertake.
Caution ahead of the numbers combined with holidays across
much of the region made for a slow start. Australian shares
were flat, while Japan's Nikkei added 0.5
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.1 percent, but almost all the markets
in that index are shut on Thursday.
Sentiment was supported somewhat by Wall Street where the
Dow notched up its first record high of the year. The Dow
ended up 0.27 percent, while the S&P 500 gained 0.3
percent and the Nasdaq 0.27 percent.
That was a resilient performance given government data had
shown the U.S. economy grew just 0.1 percent annualised in the
first quarter, far below already gloomy forecasts of 1.2
Net exports, inventories and investment all dragged on
growth, with household spending the only bright spot.
Still, investors have been willing to give the economy the
benefit of the doubt in expectations of a rebound this quarter,
and other data did offer some supporting evidence.
A closely-watched indicator of manufacturing activity in the
Chicago area jumped to 63.0 in April, to be well above
forecasts, while the ADP report on private sector employment
showed a rise of 220,000.
That fuelled hopes the April payrolls report on Friday would
at least meet forecasts of a 210,000 increase in jobs.
The Federal Reserve was prepared to look on the bright side,
ending its policy meeting with a relatively upbeat statement as
it pared back its bond buying by another $10 billion.
Recent information "indicates that growth in economic
activity has picked up ... after having slowed sharply during
the winter in part because of adverse weather conditions," the
central bank said after a two-day meeting.
Yet investors in bonds and currencies were less impressed,
taking yields and the dollar lower. Yields on 10-year Treasuries
fell 4 basis points to 2.65 percent, while those on
two-year notes dropped 3 basis points to 0.41 percent
in a sharp move for that tenor.
Interest rate futures also rallied <0#FF:> as the market
pushed back the likely timing of a first hike by the Fed.
That in turn weighed on the U.S. dollar which dropped to
three-week lows against a basket of major currencies.
Pressure on the greenback helped the euro bounce to $1.3870
from a three-week trough of $1.3770. Against the yen, the
dollar was at 102.25, having lost 0.4 percent overnight.
In commodity markets, oil fell as stocks of the fuel in the
United States hit a record high at just under 400 million
Brent crude for June delivery was stuck at $108.07
on Thursday having shed over a dollar overnight, while June U.S.
crude eased a further 6 cents to $99.68 a barrel.
Spot gold also fared poorly to stand at $1,290.66 an
ounce, after easing 0.4 percent on Wednesday.
(Editing by Shri Navaratnam)