Strong factory output buoys Asian indices

Asian markets had a fairly positive day today on the back of strong factory output figures.

The purchasing managers' index (PMI) in China fell, but it also showed that the pace of factory output was still expanding solidly, with sectors in the country exhibiting positive growth for close to two years.

South Korea's factories posted their strongest growth in December in seven months, and this development resulted in the Seoul Composite gaining 1% in today's trades to close at 2,070.

Reflecting emerging markets' economic strength, Singapore on Monday said its economy grew at an annualised rate of 6.9% in the fourth quarter and 14.7% in all of 2010.

The Straits Times, Singapore's benchmark index, gained a little more than 1% to close at 3,236.

The figures beat forecasts and highlighted the risk that Asia's growth may come at the cost of tighter monetary policy.

Hong Kong's Hang Seng index saw a smart trading day, and ended up nearly 2% at 23,436.

The Taiwan Weighted also closed in the green, up 0.6% at 9,025.

Huge public debt in developed economies, used for stimulus spending during the crisis, could weigh on their growth for some years to come, analysts say, while in comparison emerging markets' fiscal positions are relatively healthy.

In Europe, early figures showed Ireland and Spain, two countries under pressure over high debt levels, ended the year on a strong note. Ireland's PMI hit its highest level since May and Spain's index rose off the back of its strongest monthly surge in foreign orders in over a decade.

As a result, European markets lodged a positive start to the day, with Germany's DAX opened at 6,973 up 59 points from its previous close, and the CAC 40, France's benchmark index, notching up 43 points to start the day at 3,848.