* China stocks gain after jump in industrial firm profits
* Dollar index hovers near 6-mth highs as euro sags
* This week's U.S. data eyed for directional cues
By Shinichi Saoshiro
TOKYO, July 28 Asian stocks shrugged off a drop
in Wall Street and hit a three-year high on Monday, with China
taking the lead after data showed a robust jump in profits
earned by industrial firms in the world's second-largest
Spreadbetters expected Europe to open flat to slightly
higher, forecasting Britain's FTSE to start as much as
0.2 higher and Germany's DAX and France's CAX
to open little unchanged.
The dollar traded near six-months peaks against a basket of
major currencies as the euro continued to sag.
Profits earned by Chinese industrial firms rose 17.9 percent
in June to 588.08 billion yuan ($94.98 billion) from a year
earlier, up sharply from an 8.9 percent rise in May, the
National Bureau of Statistics said.
Recent data have reinforced market expectations that the
Chinese economy is powering through its recent soft patch as the
government uses targeted stimulus measures to support growth.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.2 percent after touching a three-year
high of 510.01.
China's CSI300 jumped 2.6 percent, with bank
shares surging after Reuters reported the country's fifth
biggest bank by assets plans to seek more private investors.
Hong Kong's Hang Seng index climbed 0.8 percent.
Tokyo's Nikkei, which hit a six-month closing high
Friday, was up 0.4 percent.
Funds from Middle Eastern and Asian investors appeared to be
trickling in again as the Muslim fasting month ends, helping to
shore up regional stocks, said Soichiro Monji, chief strategist
at Daiwa SB Investments in Tokyo.
"Geopolitical concerns remain as the conflict in the Ukraine
does not look like it will end soon, but there is some relief
spreading that the impact will be contained," he said.
The focus turned to whether this week's run of U.S. data
would be strong enough to keep fuelling risk appetite.
Upcoming U.S. indicators include the Case-Shiller price
index on Tuesday, second-quarter GDP due on Wednesday and
non-farm payrolls on Friday.
Factory activity surveys for major Asian economies will also
be released on Friday.
The euro traded little changed at $1.3429, within
close reach of $1.3421 plumbed on Friday, its lowest since
The euro took another hit on Friday when Germany's Ifo
business climate index painted a gloomy picture of the economy.
It had already been under pressure from a range of factors
including expectations of further easing by the European Central
Bank and diverging interest rates seen favouring the U.S. over
"We should brace for the euro breaking below key support at
1.34, given diverging U.S. and European monetary policies.
Dollar buying pressure is building as shown by the strength of
the dollar index, which this week's data, if upbeat, could
enhance further," said Junichi Ishikawa, market strategist at IG
Securities in Tokyo.
The two-day Federal Reserve policy review ending on
Wednesday was also in focus but expectations were for Chair
Janet Yellen to deliver the usual dovish message.
The dollar index, a gauge of its strength against a
basket of key currencies, stood little changed at 81.037 after
striking a near six-month high of 81.084 on Friday.
The dollar fetched 101.80 yen, having lost a bit of
momentum in the wake of a rise in U.S. Treasury yields after
climbing to a two-week high of 101.94 on Friday.
In commodities, Brent crude slipped below $108 a barrel as
fighting between Israel and Hamas Islamist militants subsided in
Gaza, although underlying geopolitical tensions limited the
Brent shed 57 cents to $107.82 a barrel after a 1
percent gain last week.
(Editing by Eric Meijer & Kim Coghill)