BANGKOK (AP) — Asian stock markets rose Monday as data showed the economy of earthquake-battered Japan shrank less than expected.
Oil prices hovered above $85 a barrel as investor worries began to ease after Wall Street closed in positive territory Friday after a dizzying week of sharp gains and losses. The dollar rose against the yen but lost ground against the euro.
Japan's Nikkei 225 index was 1.2 percent higher at 9,068.59 after the government announced the economy had contracted at an annualized rate of 1.3 percent in the April-June quarter.
While that was the third straight quarter of contraction for the world's third-largest economy, it was better than a 2.6 percent fall forecast in a Kyodo News agency survey of analysts.
A modest weakening of the yen helped Japan's export sector. Toyoto Motor Corp. rose 2 percent while rival Honda Motor Corp. was up 1.9 percent. Consumer electronics giant Sony Corp. rose 3.2 percent. Meanwhile, video game maker Nintendo Co. soared 9.4 percent.
Japan's economy was thrown into a tailspin on March 11 when a mammoth earthquake and tsunami wiped away much of the country's industrial northeast. Entire towns were washed away. Infrastructure, utilities and factories vital to production were destroyed.
Analysts at DBS Bank Ltd. in Singapore said the smaller-than-expected contraction in Japan's economy was positive news spurred by the restoration of infrastructure, an improvement in sentiment and the release of pent-up demand.
"A significant positive growth will soon be reflected" in the third quarter, DBS said in a report.
However, Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong, said whatever relief was reaped from Japan's GDP figures was outweighed by fears that Europe's debt problems were about to blow up.
Still, Asian banks are mostly isolated from the storm since their exposure to toxic European debt was thought to be limited, he said.
"Their proportions in euro bonds do not seem large enough for them to face insolvency problems," he said.
Industrial and Commercial Bank of China, the world's biggest bank by market value, rose 1.6 percent. Commonwealth Bank of Australia Ltd., the nation's largest lender, was 0.9 percent higher.
Elsewhere, Hong Kong's Hang Seng index shot up 2.3 percent to 20,069.05 and Australia's S&P/ASX 200 jumped 2 percent to 4,255.40. Benchmarks in Singapore, Taiwan, the Philippines and mainland China were also higher. South Korea's market was closed for a public holiday.
A rebound in retail sales in July pushed Wall Street higher Friday, the first time since early July that the Dow Jones industrial average and S&P 500 index rose for two consecutive days.
Global markets fluctuated wildly last week as investors already concerned over Europe's worsening debt crisis were further rattled by signs the U.S. might be headed toward recession.
The U.S. Federal Reserve last week signaled that it would keep interest rates super-low for two more years because of expectations that unemployment will remain high and economic growth slow.
The Fed's decision came after the government said the U.S. economy had barely expanded in the first six months of this year.
Benchmark oil for September delivery was up 6 cents to $85.44 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell 34 cents to settle at $85.38 on Thursday.
In London, Brent crude was up 12 cents to $107.88 per barrel on the ICE Futures exchange.
The euro strengthened to $1.4295 from $1.4245 late Friday in New York. The dollar rose to 76.82 yen from 76.75 Japanese yen.
By PAMELA SAMPSONBusiness & Investment Opportunities
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