UPDATE: Asian Shares Mostly Up; HSBC Lifts HK Market

SINGAPORE -- Asian share markets were mostly higher Tuesday, after strong gains on Wall Street, with commodity-related stocks up after base metals and crude oil prices surged Monday. In Hong Kong, HSBC was getting a lift from above-expectation results.

The Dow Jones Industrial Average rose 1.3% and the S&P 500 ended 1.5% to the good, in New York Monday. Both were powered to their highest closes since Nov. 4, 2008, helped by data showing a pickup in manufacturing activity across the globe, while many financial stocks advanced after reports of strong profits from U.K. banking heavyweights HSBC and Barclays.

"There still is concern that the market is overheated, but the mood is positive, supported by several factors," including better-than-expected U.S. ISM manufacturing data, suggesting growth in the July-September quarter, said Daiwa Securities analyst Shinichiro Matsushita.

Japan's Nikkei 225 was 1.1% higher, Australia's S&P/ASX 200 was up 1.5%, South Korea's Kospi Composite was up 0.6% and New Zealand's NZX-50 was 1.3% higher. DJIA futures were down 16 points in screen trade.

Hong Kong's Hang Seng Index added 0.5%, with HSBC's 6.4% rise powering most of the gains after the bank reported first-half net profit fell 57% from a year earlier to $3.35 billion, but still above analysts' expectations.

Oil stocks were higher after crude futures surged to a six-week high Monday amid growing optimism about the outlook for the world economy and as the U.S. dollar weakened. Nymex light, sweet crude for September delivery settled $2.13, or 3.1% higher at $71.58 a barrel overnight.

In Asian trade, oil was down 22 cents at $71.36 a barrel on Globex, but tad off its lows after July data showed China is on course to break its monthly record for total crude imports. Inpex was up 1.1%, Japan Petroleum was 2.1% higher, Woodside Petroleum was up 0.6% and SK Energy was up 0.9%. In Hong Kong, Cnooc was up 1.9%.

China's market bucked the regional trend, with the Shanghai Composite Index trading down 0.7% on profit-taking in shipping stocks. China Shipping Container Lines fell 1.1%, while China Shipping Development lost 1.3%.

Materials stocks were also getting a boost as the price of several industrial metals rose sharply Monday, as improved manufacturing reports, especially from China and the U.S., gave more weight to hopes for a strong rise in demand.

Rio Tinto was up 5.6%, BHP Billiton was 3.1% higher and Alumina had gained 4.9%. Nippon Steel was up 1.3% and Sumitomo Metal Mining was up 3.7%. In Hong Kong, Chalco traded up 3.4%.

In Sydney, ANZ Bank shares were 2.5% higher, after it announced that it will pay $550 million for some of Royal Bank of Scotland's Asian banking operations. The bank said it will acquire RBS's retail and commercial banking operations in Taiwan, Singapore, Indonesia and Hong Kong, and its institutional businesses in Taiwan, the Philippines and Vietnam. ANZ said that the deal is expected to be cash earnings per share accretive within two years after the deal is completed.

In South Korea, Samsung Electronics was up 1.4% and Hynix was 2.5% higher as exporters gained on expectations for U.S. economic recovery, but banks were lower on profit-taking with Shinhan Financial down 2.5% and Samsung Securities 1.9% lower.

In Taiwan, phone-maker HTC, which was limit-down by 7% for a second day after posting disappointing third-quarter guidance. It weighed on the Taiwan market, with index down 0.1%.

Among other regional markets, Indonesian shares were up 1.4%, Philippines' market rose 1.5% and Malaysia's KLCI added 0.6%. Singapore's Straits Times Index gained 0.3%.

In foreign exchange markets the dollar was slightly firmer after it weakened Monday to its lowest level for the year against the euro and a broad range of commodity-linked and emerging market currencies.

"Given the lack of any major data today, we think there is a possibility of a Turnaround Tuesday that could see a modest but temporary dollar bounce. While the reflation trade will continue to suffer periodic setbacks in the third quarter, both the yen and the buck remain vulnerable to renewed selling pressures when optimism picks up," Brown Brothers Harriman said in a report.

The euro was at $1.4402 compared with $1.4414 late in New York Monday. It was buying Y137.35 from Y137.43. The dollar was at Y95.32 from Y95.37.

The U.S. dollar fell below THB34.00, with suspected buying by the Bank of Thailand limiting the local currency's strength.

But Thomas Harr, strategist with Standard Chartered, said any intervention efforts by authorities in Thailand, Korea and Taiwan likely weren't intended to reverse the U.S. dollar's ongoing slide against Asian currencies, but rather aimed at slowing the process to make it more palatable for local markets.

The Australian dollar was well supported after breaking above key technical resistance Monday on rising risk appetite and stronger commodity prices.

Reports that Australian police had arrested four men who they allege were planning a suicide attack on an Australian military base were not impacting the currency, said John Horner, head of foreign exchange strategy at Deutsche Bank. The Aussie dollar was buying US$0.8449 early in Asia, its highest level against the U.S. dollar since Sept. 2.

UBS head of sales George Kanaan said the market isn't too concerned about the country's disappointing monthly retail trade data. "Money just keeps coming into our market," he said.

Australian June retail trade fell 1.4% from May, expectations for a 0.5% rise, but second-quarter retail trade rose 2.0%, compared a 1.2% rise expected, indicating a positive GDP surprise may be on the cards.

Japanese government bonds were a little lower, weighed by the rising stock market. The lead September JGB futures was down 0.29 at 137.49 points while the 10-year cash yield rose to 1.45%, its highest since June 22.

Spot gold was at $955.40 per troy ounce, down $1.60 from Monday's New York close.

LME three-month copper was trading at $5,980 a metric ton, down $20 since Monday's kerb in moderate volume as metals consolidate after Monday's rally.