Mfarhanonline Business News 
HONG KONG: Asian stocks were mixed in early trade on Thursday, with Shanghai and Hong Kong rising on hopes that China”s latest interest rate hike will be its last for some time.
Shanghai rose 0.10 percent and Hong Kong gained 0.58 percent while Seoul added 0.25 percent. Sydney fell 0.18 percent and Tokyo was 0.10 percent lower.
The Chinese central bank increased its benchmark deposit and lending rates by 25 basis points in the latest salvo by leaders battling to bring inflation under control.
Beijing, which has expressed fears that consumer price rises could trigger social unrest, earlier this year set a full-year target for inflation of about four percent but data showed it hit a three-year high of 5.5 percent in May.
“The rate hikes China has delivered, including Wednesday”s, have been an appropriate response to the pick-up in inflation over the last 12 months,” RBC Capital markets said in a note to clients.
It added that “by making these moves, policymakers have reduced the risk that they will need to slam on the brakes with very aggressive rate hikes later.
“The greater policy urgency that we have seen over the last six to nine months now has created a situation where a pause in rate hikes can now be contemplated.”
However, while China sees the rate hikes as necessary, there are fears that they could put the brakes on growth and in turn stunt other economies that rely on it, such as Australia.
In Tokyo the Nikkei edged lower after it hit its highest close since March 11 when a devastating earthquake shattered the northeast of Japan, sending global markets tumbling.
“A sense of optimism for the second half of the year still prevails, though gains will be capped by a relatively weak euro,” Hiroichi Nishi, general manager of equity at SMBC Nikko Securities, told Dow Jones Newswires in Tokyo.
On currency markets the eurozone crisis continued to weigh on sentiment after Portugal”s credit rating was reduced to junk status by Moody”s and Standard Poor”s warned a plan to bail out Greece could amount to a default.
“The downgrading of Portugal that came after SP”s warning stoked worries about contagion spreading to other peripheral nations such as Ireland,” Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ, said.
The euro fetched $1.4327 in early Tokyo trade against $1.4314 in New York late Wednesday when it suffered a sell-off due to concerns that the Greek and Portuguese troubles could spread. The euro stood at 1.4450 in Asia on Wednesday.
The single currency was also at 115.87 from 115.88 while the dollar fetched 80.85 yen from 80.88 yen.
New York”s main contract, light sweet crude for August delivery, rose 67 cents to $97.32 a barrel and Brent North Sea crude for August delivery added 62 cents to $114.24.
Gold opened at $1,527.50-$1,528.50 an ounce in Hong Kong, up from $1,516.00-$1,517.00 at close on Tuesday. (AFP)
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