Nigeria Content Online

Asian shares edged
up while the Australian dollar and commodities pared early losses as
investors bet China’s latest interest rate hike would not change the
optimistic outlook for the global economy in 2011.

People’s Bank of
China raised rates by 25 basis points on Saturday, the second rate rise
in just over two months, as part of a series of measures designed to
combat inflation which hit a 28-month high of 5.1 percent in November.

“Our economists had
expected a rate rise before the end of the year, but releasing the news
on Christmas Day itself came as a little surprise to the market,” said
Chen Xin Yi, associate vice president at Barclays Capital in Singapore.

“Nevertheless, we
believe that the well-calibrated timing reflects consideration for
minimizing unwanted financial market volatility and reducing potential
capital movement to the extent possible.” The MSCI index of Asian
stocks outside Japan rose 0.2 percent. Major markets such as Hong Kong
and Australia remained closed.

“The impact of
today’s rate move on the real economy’s growth momentum is likely to be
minimal.” said Qian Wang, chief China economist at JP Morgan.

China’s key stock
index pared earlier gains and yuan forwards were modestly higher. The
Shanghai Composite was down 0.3 percent, with weak small and mid-cap
shares offsetting mild gains in banking and insurance shares.

Japan’s Nikkei
closed up 0.75 percent, extending its recent outperformance versus
other Asian markets. The Nikkei is up over 10 percent this quarter
versus a 5.4 percent rise for the MSCI Asia ex-Japan index.

Still, Japanese
investors are entering 2011 in a bullish mood, raising equity holdings
to a 10-month high, increasing exposure to high-yield credit and
cutting back on government debt, Reuters polls showed last week.

S&P futures were a shade lower, down 0.2 percent.

Fundamentals support commodities

Commodity markets
pared early losses in response to an interest rate rise by PBOC,
focusing instead on positive fundamentals and threats to supply.

U.S. wheat had
dropped by more than 2 percent at the open before recovering to $7.81-
a bushel, down 0.2 percent, while spot gold was trading flat after
dropping to a one-week low of $1,371.1 earlier.

Crude oil futures reversed early falls, rising 0.3 percent to a two-month high.

The Australian
dollar was flat after slipping in early trading on expectations that
more tightening by China could prompt investors to sell the Aussie
after the year-end break.