* China factory activity hits 16-month high in August
* Copper prices rise, but gold and oil fall on Syria delay
* Asia shares and Australian dollar up, USD/JPY at 1-wk high
* Dollar holds at 4-week high against basket of currencies
By Dominic Lau
TOKYO, Sept 2 Asian shares climbed to a two-week
high on Monday, and the Australian dollar and copper gained, as
China said its manufacturing expanded in August at the fastest
pace in more than a year.
A delay in potential U.S. military action against Syria, as
U.S. President Barack Obama sought Congressional support, also
helped boost short-term risk appetite.
China's bullish purchasing managers' index added to recent
positive data from the U.S. and Europe, raising hopes the global
economy was on a firmer footing.
European shares were expected to open firmer, with Britain's
FTSE 100 seen up as much as 0.7 percent and Germany's
DAX up as much as 0.9 percent, according to financial
MSCI's broadest index of Asia-Pacific shares outside Japan
advanced 1 percent, hitting a two-week high and
extending a 2.1 percent rise in the previous two sessions, and
Tokyo's Nikkei gained 1.4 percent in light trade. U.S.
markets are closed for the Labor Day holiday.
Hong Kong's Hang Seng Index climbed 1.8 percent and
China's CSI300 index was up 0.5 percent.
Steven Englander, Citi's global head of G10 FX strategy,
recommended investors short the yen on the back of the Chinese
figures, the Syrian news, and a panel supporting an increase in
Japan's sales tax.
China's official purchasing managers' index (PMI) rose to
the highest level since last April and topped market
"This will reinforce views of China stabilisation. It is a
risk positive, if only because it removes some of the short-term
risk that the China slowdown could spiral further downwards,"
Citi's Englander wrote in a note.
A separate manufacturing PMI report from HSBC, released on
Monday, showed activity in privately owned factories increased
over August for the first time in four months.
But India's manufacturing PMI, also from HSBC, shrank in
August for the first time in more than four years, adding to the
country's deepening economic malaise as the central bank
struggles to defend the battered rupee currency.
The Indian rupee edged down 0.3 percent to 65.90 to
the dollar after two days of gains, and was not far from a
record low of 68.80 per dollar hit last week.
Indonesia's rupiah, which has also been under
pressure lately, was down 0.2 percent after the country logged a
wider-than-expected trade deficit.
The yen had risen recently on heightened geopolitical
tensions and as investors dumped emerging market currencies to
position themselves for the U.S. Federal Reserve to begin
reducing stimulus, perhaps from its meeting later this month.
"I think the delay in the potential military strikes against
Syria will help the global environment in terms of risk," said
Mitul Kotecha, head of global foreign exchange strategy for
Credit Agricole in Hong Kong.
On Monday, the yen slipped 0.5 percent to 98.62 yen to the
dollar, pulling well away from last week's low of 96.81,
and eased 0.3 percent to 130.21 to the euro.
The Australian dollar, which is seen as a proxy for Chinese
growth because of the two countries' close trade ties, rose 0.7
percent to $0.8966.
Against a basket of major currencies, the U.S. dollar
held steady at a four-week high.
Buoyed by the factory activity data from top-consumer China,
copper prices rose 2.2 percent and were on track to end
a four-day losing run.
Oil and gold prices fell as investors unwound their
positions after the U.S. postponed a military strike against the
Syrian government, which is accused of using chemical weapons
Brent crude prices dropped 1.1 percent to below $113
a barrel, on track for a third day of declines. They touched a
six-month peak of $117.34 last week on concerns that U.S.
military intervention could lead to retaliation and disrupt
crude supply in the Middle East region, which pumps a third of
the world's oil.
Safe-haven gold dipped 0.3 percent to around $1,391
an ounce after falling as low as $1,379.44, a one-week trough,
earlier in the session.