* China & Hong Kong shares buoyed by economic & stimulus hopes
* Nikkei at 6-month peak, Seoul highest in over 3 years
* Dollar consolidates gains before US economic news barrage
By Wayne Cole
SYDNEY, July 29 Asian shares touched fresh three-year highs on
Tuesday as investors in the region drew encouragement from a rally in Chinese
markets, though caution was warranted given the torrent of U.S. economic news
still to come this week.
Hong Kong's key stock index rose 0.5 percent to its loftiest level in
over 3-1/2 years on optimism that the economy has turned a corner and as
investors wagered on more growth-friendly policies from Beijing.
The charge had been led by Chinese banks after a Reuters report said the
country's fifth-biggest bank by assets planned to seek more private investors.
The CSI300 of the leading Shanghai and Shenzhen A-shares added 0.5
percent, bringing its gains to almost 8 percent in seven sessions.
"The recent rally of Hong Kong and China stock markets is pretty much
liquidity-driven due to favourable fund flow. And fund flow is maybe because the
two markets remain relatively lagging behind in terms of the valuation and
performance," said Ben Kwong, director at KGI Asia in Hong Kong.
MSCI's broadest index of Asia-Pacific shares outside Japan
added 0.33 percent to be just a whisker from a peak last touched in April 2011.
Likewise, South Korea's index gained 0.7 percent to its highest since
Japan's Nikkei rose 0.4 percent to a six-month high as investors
focused on the positive in mixed economic news.
While household spending and retail sales underwhelmed, the availability of
jobs in Japan rose to the highest in 22 years in an upbeat omen for wages and
the government's aim of reflating the economy.
Nissan rose 3 percent after the automaker's April-June operating
profit rose a higher-than-expected 13.4 percent.
In Europe, financial spreadbetters expected opening gains of 0.1 to 0.2
percent for the FTSE 100 <.FTSE >, DAX and CAC 40.
EURO ON DEFENSIVE
Wall Street had been more restrained as the major indices approached
daunting chart barriers. The Dow had ended Monday up 0.1 percent, while
the S&P 500 gained a bare 0.03 percent, and the Nasdaq lost 0.1
Action was also lacking in currencies. The dollar held close to a six-month
peak against a basket of its peers, having gone virtually nowhere as investors
kept to the sidelines ahead of a policy review by the Federal Reserve.
The Fed is sure to cut its monthly bond-buying program by another $10
billion as it looks to wind up the scheme later in the year, but the focus for
markets is on any clues to the timing of its first interest rate hike.
With other key data such as U.S. gross domestic product and the closely
watched non-farm payrolls report still to come, investors were content to sit on
The euro was pinned near an eight-month trough of $1.3421 set on
Friday. It traded at $1.3432, having shuffled between $1.3430 and $1.3440.
Against the yen, the dollar edged up to 101.96, while the common
currency barely budged at 136.93.
In commodities, gold was idling at $1,304.79 after a very quiet 24
hours saw it hold to an $8 range.
Oil prices dipped as signs of excess supplies of North Sea and West African
crude and weak demand in Europe and Asia offset fears of escalating tensions in
Ukraine and the Middle East.
September Brent lost 4 cents to $107.53 a barrel, while U.S. crude
futures eased 26 cents to $101.41.
(Editing by Kim Coghill and Eric Meijer)