Another gainful day for Asian indices

Japanese stocks led Asian equities higher, climbing to their highest since May, and oil prices were perched near a 27-month high on Tuesday, with investors betting the improving US recovery may be reflected in jobs data later in the week.

The dollar also rose while US Treasuries dipped in Asia as investors kicked off the year turning to riskier assets such as high-yield credit, on signs that growth in the world's biggest economy may accelerate in 2011.

Japan's Nikkei stock average closed at 10,398, 1.65% higher at its highest level in 7-1/2 months, led by resource companies, as oil and commodity prices rose on the stronger economic growth outlook this year.

Stocks are also getting a boost from the ‘January effect’, when fund managers are no longer distracted by year-end window dressing and instead focus on stocks they find attractive, traders said.

The Shanghai Composite Index was up 1.6% at 2,853, supported by a 5% jump in property stocks as worries about further monetary tightening eased after surveys indicated that Chinese factory inflation may be abating.

Also, Chinese corporate profits are expected to rise 15-20% annually, which lends strong support to current valuations. However, inflation remained a top concern for Chinese policymakers.

The positive run in the Asian markets continued, after yesterday’s robust PMI numbers. Other major indices which closed in the green were the Hang Seng at 23,668 up 1%, the Straits Times at 3,256 up 0.6%, and the Seoul Composite at 2,085 up 0.7%.

The Taiwan Weighted at 8,997 was the only index to close in the red, down 0.3%.

The Asian indices’ western counterparts, on the other hand, saw a mixed opening.

The FTSE 100, the UK’s major index, was up 1.6% at 5,995 as the European markets opened, while the CAC 40, France’s benchmark index, opened 2% down at 3,900, and Germany’s DAX also opened in the negative, down 0.3% at 6,968.