A rally in China's stock markets to seven-year highs on Monday kept an index of Asian shares near its highest level since September, as weak Chinese trade data intensified expectations for more economic stimulus measures from Beijing.

Bulls are expected to prevail in early European trading as well, with financial spreadbetters predicting Britain's FTSE 100 would open 2 to 3 points higher, or up 0.04 percent; Germany's DAX to open 19 to 20 points higher, or 0.16 percent up; and France's CAC 40 to open 5 points higher, or 0.1 percent higher.

"Stock markets have shown us time and again that you don't need a strong economy to have rampant gains. In fact, an economy that is showing fragility has tended to outperform, notably when the central bank is pushing a more accommodative stance," Chris Weston, chief market strategist at IG, wrote in a note.

Speculative buying

The Chinese markets' bull run has been fuelled by speculative buying on hopes of fresh steps to boost an economy struggling for momentum, with first quarter gross domestic product data due to be released on Wednesday expected to show 7.0 percent growth.

"More stimulus measures are needed in the future," said Nie Wen, a strategist at Hwabao Trust in Shanghai.

In March, exports contracted 15 per cent from a year earlier. The surprise drop left China with a trade surplus of $3.1 billion last month, much smaller than forecasts for one of $45.4 billion.

"Exports were weak in the Q1, and they won't pick up soon given uncertainties from the US, Europe and emerging countries," said Yao Xuekang, an analyst at Essence Securities in Beijing.

MSCI's broadest index of Asia-Pacific shares outside Japan erased early losses and was up about 0.4 per cent. That moved it back toward its highest levels since September, touched in the previous week.

Hong Kong's benchmark Hang Seng Index was up 1.2 per cent, on track for its eight consecutive rise on money inflows from mainland China investors who are seeking cheaper shares.

The Shanghai Composite Index was up 1.7 per cent, while bargain hunters also pushed Shanghai's dollar-denominated B share index up more than 9 per cent for the second trading day.

Nikkei ends flat

Japan's Nikkei stock average ended nearly flat, giving up a few ticks and never rising above the 20,000 level, which was broken on Friday for the first time in 15 years.

Wall Street marked solid gains for both the day and the week on Friday, while the pan-European FTSEurofirst 300 share index reached a 15-year high and Germany's DAX rose to a record.

A renewed drop in the euro powered the European gains, with the single currency slumping to a 3-1/2 week low of $1.0567 on Friday. On Monday, it slipped about 0.2 percent on the day to $1.0587.

"We think the euro will fall below parity against the dollar by the end of the year because of the ECB's easing and low returns on capital in the euro zone," said Shin Kadota, chief FX strategist at Barclays in Tokyo.

Against its Japanese counterpart, the dollar added 0.1 per cent to 120.40 yen, with expectations of higher U.S. interest rates while Japan's stay low bolstering the greenback in the long term.

The dollar index stood at 99.553, up about 0.2 per cent on the day, and moving back toward its 12-year peak of 100.390 set last month.

Crude oil prices extended last week's gains made after an agreement on Iran's nuclear programme seemed more elusive, lessening the chances of a rapid return of Iranian oil to the market.

Brent was up about 0.1 percent at $57.92 a barrel, after adding 5.3 percent for the week. U.S. crude rose about 0.3 percent to $51.78 after an increase of 5.0 percent last week, its fourth consecutive weekly rise.

World powers and Iran announced the interim accord last week, but on Thursday, Iranian leaders said all sanctions on the country must be lifted on the same day as any final agreement.

Spot gold fell about 0.2 percent on the day to $1,204.20 an ounce, after snapping a three-week winning streak on a stronger dollar.

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