Dawn Chorus: Basel III deal and encouraging economic data boost Asian stocks

Asian shares rose on Monday in response to heartening economic data out of China and the US, and as an agreement on global bank rules gave lenders some respite before the planned fundraisings.

The MSCI Asia Pacific Index rose 0.9% to 123 as of 10:51 a.m. in Tokyo, Japan’s Nikkei 225 Stock Average surged 1.3% and the Kospi index was 0.4% up in Seoul. Australia’s S&P/ASX 200 Index advanced 1% while China’s Shanghai Composite Index gained 0.2%. Mumbai’s BSE index  was up 1.3% at around 19,034 points.

Investors were upbeat as the Chinese factory data showed the production increased in August and money growth easily topped expectations, indicating that the economy remained buoyant despite government efforts to clamp down on bank lending and property speculation.

US wholesale inventories surged the most in two years in July, adding to the optimistic mood. The country’s trade gap also narrowed sharply in July.

Meanwhile, global bank regulators agreed in Basel on Sunday to force banks to more than triple the amount of top-quality capital they must hold in reserve.

In company news, Honda Motor Co increased 1.4% in Tokyo, Komatsu Ltd advanced 1.3% and BHP Billiton gained 1.5% on higher commodity prices.

In the US, Wall Street sustained its rally last week, with the Standard & Poor’s 500 Index registering its biggest two-week gain since June amid better-than-forecast US jobs data and as concern eased that Europe’s sovereign debt crisis would derail the global economic recovery.

European stocks also rose for a second straight week, with the Stoxx Europe 600 Index advancing 1.7%, in response to the positive economic data from the US.

This week, reports on US retail sales, consumer prices and industrial production will be watched closely for signals of any uptick.

Meanwhile, Japan's prime minister faces a party leadership vote on Tuesday as the yen strengthens, the economy struggles and public debt mounts.