HONG KONG, Mar 26 – Asian stocks edged up Thursday as investor confidence grew following data from the United States showing the world\’s biggest economy may be showing signs of recovery.
The good news came as battle lines were drawn between the United States and Europe ahead of a key crisis summit set for next week in London over how best to stem the worldwide economic downturn.
Some European Union leaders are wary of Washington\’s plans to spend hundreds of billions of dollars to revive the US economy, with the Czech Republic premier, who holds the bloc\’s rolling presidency, calling it a "way to hell".
But investors in Asia shrugged off concerns. Tokyo finished the day up 1.84 percent, the Nikkei\’s highest level in almost 11 weeks. Sydney finished 1.03 percent higher, while Hong Kong was up 2.55 percent after morning trade.
The Dow Jones Industrial Average on Wednesday rose 89.84 points (1.17 percent) to close at 7,749.81.
Asia\’s major bourses tracked Wall Street, gaining ground on news that sales of new US homes rose a stronger-than-expected 4.7 percent in February, after six months of declines
Orders for big-ticket US-made durables such as airplanes and cars also rose in February for the first time in six months. The 3.4 percent increase defied analyst predictions of a 2.4 percent drop.
The news fuelled hopes that the world\’s biggest economy could be on the road to recovery, although some analysts remained cautious.
"The recent change in the tone of data is unmistakable," said Brian Wesbury, economist at First Trust Portfolios.
"These reports signal that the recession is quickly losing steam and is consistent with our forecast that it will be over by mid-year, much earlier than the consensus expects."
But Barclays Capital economist Michelle Meyer warned the upticks in housing and manufacturing sales could be statistical quirks.
"We do not interpret today\’s (durable goods) report as a signal of the end of the downturn in manufacturing," she said in a note to clients.
The US Commerce Department was Thursday to release its final update on gross domestic product for the fourth quarter of 2008 — with an expected annualised decline of 6.6 percent, from last month\’s estimate of a 6.2 percent drop.
The administration of US President Barack Obama is trying to jumpstart the economy — which first plunged into recession in late 2007 — by spending hundreds of billions of dollars to shore up ailing banks and stimulate growth.
But that approach has been questioned by European leaders, who favour tougher financial regulations and less outright spending.
Czech Prime Minister Mirek Topolanek on Wednesday told European lawmakers that "the United States is not on the right path" with its costly stimulus plans.
"All of these steps, their combination and their permanency is a way to hell. We need to read the history books," he said in Strasbourg.
The tough words for Obama and his Treasury Secretary Timothy Geithner came a week before leaders of the 20 industrialised and major developing countries convene for a summit in London.
UN Secretary General Ban Ki-moon has urged the G20 leaders to commit to a "substantial" global stimulus package in addition to their national efforts.
"This international stimulus needs to be of a very substantial size, commensurate with the challenge," the UN secretary general said after talks with British Prime Minister Gordon Brown.
The IMF\’s director for the Western Hemisphere said Latin America\’s economy will suffer negative growth this year as it is hit by the global economic downturn.
Nicolas Eyzaguirre said he expects the average country in Latin America to be "in negative territory" in 2009, "but not that much."