4 Min Read
* China official PMI comes in better than expected
* Asian shares head for first gain in four days
* Australian dollar off 3-yr lows, dollar up from 6-wk lows
* Commodity prices extend gains, though gold eases
By Dominic Lau and Wayne Cole
TOKYO/SYDNEY, Aug 1 (Reuters) - Asian shares and commodity prices edged higher on Thursday after China's official manufacturing activity data came in better than expected, easing some concerns of a sharp slowdown in the world's second-largest economy.
The Australian dollar, which is seen as a proxy of Chinese growth because of the countries' strong trade links, pulled away from a three-year trough of $0.8910 hit in early deals. The currency was last at $0.8971, up 0.3 percent on the day.
European shares were expected to open slightly firmer, with both Britain's FTSE 100 and Germany's DAX seen up 0.2 percent, while U.S. S&P 500 index futures added 0.5 percent.
Growth in China's manufacturing sector picked up slightly last month, an official survey showed, exceeding market expectations.
"People are pretty sceptical about the number itself. You will see short-term relief...but not massive relief," a hedge fund manager said.
A separate HSBC PMI survey showed China's factory activity shrank for a third straight month in July, matching a preliminary reading published last week.
Still, the official data was enough to spur Chinese stocks higher and lend support to regional equities. Asian shares measured by MSCI Asia-Pacific ex-Japan index added 0.1 percent to be on track to snap a three-day losing run.
China's CSI300 index advanced 1.4 percent after trading up by as much as 2.4 percent earlier in the session.
In Tokyo, the Nikkei share average climbed 2.5 percent.
Beijing is trying to tackle overcapacity in industries such as steel, cement and shipbuilding, but wants to make sure the economy, which has slowed in nine out of the past 10 quarters, does not lose too much momentum in the process.
It has unveiled a series of targetted steps in recent weeks, including spending on social housing and railways and tax cuts for small businesses.
Commodity prices were also buoyed by China's official PMI.
Brent crude gained 0.2 percent to just below $108 a barrel. It had climbed 0.7 percent after the U.S. Federal Reserve said it would continue to buy $85 billion in assets per month, and made no mention of when it might start scaling back.
Copper prices rose 0.4 percent, extending a 2.2 percent bounce in the previous session, while gold eased 0.2 percent to around $1,320 an ounce, reversing early gains as the U.S. currency strengthened.
The dollar was up 0.5 percent against a basket of major currencies, pulling away from a six-week trough hit on Wednesday.
The greenback was up 0.5 percent at 98.425 yen, while the euro dipped 0.2 percent to $1.32735.
Policy meetings at the European Central Bank and the Bank of England could see both reaffirm their guidance that rates will stay low for an extended period, perhaps to the benefit of the U.S. dollar.
Overnight, Wall Street stocks had ended near flat.
Stocks and commodities had been supported by data that showed the U.S. economy grew an annualised 1.7 percent in the second quarter, beating forecasts of a 1.0 percent rise.
However, growth in the previous four quarters was revised down and the overall impression was of a sub-par performance.
While Treasury yields dipped slightly on the statement, the market still suspects the Fed will start slowing its stimulus sooner rather than later.
"We continue to expect tapering of the open-ended asset purchases to commence in the autumn, probably already following the September 18th FOMC meeting. If not, then certainly before year-end," said Martin McMahon, an economist at Commonwealth Bank of Australia.
Much might depend on what the U.S. payrolls report shows on Friday. Forecasts favour a solid increase of 184,000 with perhaps a chance of an upside surprise after the ADP survey showed private jobs rose 200,000 in July.