Markets shrug off EFSF downgrade as China hopes boost Asia

Stocks in Asia rallied overnight as reports of slowing Chinese growth increased speculation the government would act to ease lending curbs and avoid a hard landing.

The regional benchmark index headed for a six-week high as the MSCI Asia Pacific index gained 1.7% to reach 117.58 on close.

Chinese data showed growth of the world's second largest economy slowed slightly in the fourth quarter to 8.9%, but surpassed market expectations of 8.6%.

Japan's Nikkei gained 1.05% to 8,466, Hong Kong's Hang Seng rose 2.53% to 19,493.20 while the S&P/ASX 200 Index jumped 1.65% to reach 4,215.6.

Blue-chip heavyweights led the rally in the Hong Kong market following the upbeat Chinese growth data. Cnooc, China Resources Land, ICBC, Ping An and Chalco were all up by more than 2.5%.

A successful sale of French treasury bills yesterday also reassured investors following the country's credit downgrade by Standard & Poor's late on Friday.

However, US investors appeared more cautious as the stock market showed moderate losses on close last night. The Dow Jones dropped 0.39% to 12,422, the S&P 500 fell 0.49% to 1,289.09, while the Nasdaq Composite Index dropped 0.51% to 2,710.67.

The euro was up 0.72% to €1.2759 against the dollar, while the US dollar lost 0.21% to fall back to Y76.6140 against the Japanese yen.

London showed moderate gains on open this morning, despite news of S&P's downgrade of the eurozone bailout fund. The FTSE 100 gained 0.77% to reach 5,701.

Meanwhile, Europe also rallied as the French Cac 40 rose 0.78% to reach 3,250 and the German Dax was up 1.14% to 6,291.