Asia stocks gain on Wall Street rally; Europe down

HONG KONG: Asian stock markets gained more ground Tuesday, following Wall Street's advance as an upbeat U.S. manufacturing report buoyed investor confidence in a global recovery. European shares slipped in early trade.

Most major Asian markets were higher for a second straight session, while the dollar fell against the yen and the euro. Crude oil prices closed in on $82 a barrel.

Lifting sentiment across Asia was an overnight rise in U.S. markets. Wall Street opened 2010 with strong gains amid optimism about the country's economic recovery after a report showed demand at American factories was increasing. The Institute for Supply Management's index of manufacturing activity rose to 55.9 from 53.6 in November, a bigger improvement than analysts predicted.

The news combined with robust manufacturing figures in China and higher commodity prices in recent days to fuel hopes the pickup in global demand and economic activity was sustainable.

Still, lingering problems in the world economy, including high debt in the West, could continue to drag on growth and become more pronounced once the effects of government stimulus measures start to fade, analysts say.

"That doesn't mean there's going to be a sharp contraction in the global economy," said Jan Friederich, a senior economist for the Economist Intelligence Unit in Hong Kong. "It's just that we're not going to come back to the high growth rates that markets are expecting and that we saw before the crisis."

European markets, up sharply the previous session, opened down: Britain's FTSE 100 shed 0.3 percent, Germany's DAX lost 0.3 percent and France's CAC-40 pulled back 0.4 percent. U.S. futures suggested a mixed open on Wall Street Tuesday.

Tokyo's Nikkei 225 stock average added 27.04 points, or 0.3 percent, to 10,681.83, its advance curtailed in the afternoon session on selling of exporters as the yen climbed again the dollar.

Hong Kong's Hang Seng jumped 456.30, or 2.1 percent, to 22,279.58.

Elsewhere, Shanghai's main stock measure climbed 1.2 percent to 3,282.18 after falling the day before. Australia's market was up 1 percent, helped by stronger commodity prices, while Singapore's index gained 0.8 percent and India's Sensex rose 0.7 percent.

In South Korea, the Kospi edged down 0.3 percent to 1,690.62.

Overnight in the U.S., the Dow industrials rose 155.91, or 1.5 percent, to 10,583.96.

The Standard & Poor's 500 index rose 17.89, or 1.6 percent, to 1,132.99, while the Nasdaq composite index rose 39.27, or 1.7 percent, to 2,308.42.

Oil prices extended their gains, with benchmark crude for February delivery up 27 cents at $81.78 a barrel. The contract jumped $2.15 overnight.

In currencies, the dollar slipped to 91.90 yen from 92.50 yen. The euro rose to $1.4421 from $1.4407.