* China inflation fastest in 2 yrs, supporting rate hike
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* LME copper hits record high, oil at 2-year high
* Japan's Nikkei rises to highest since June on charts, yen
* China policy, G20 outcome make outlook for risk unclear
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By Kevin Plumberg
HONG KONG, Nov 11 (Reuters) - Japan's Nikkei stock index
rose to its highest since June on Thursday, adding to returns
that have outstripped U.S. and European markets so far in
November, while a blast of Chinese economic data supported
commodity prices.
Chinese consumer price inflation in October quicked to its
fastest pace in two years, which is likely to sharpen
complaints from Beijing and others that the Federal Reserve's
$600 billion money printing scheme will hasten capital flows to
their economies, complicating efforts to keep price pressures
at bay.
Shares of large Chinese banks listed in Hong Kong rose on a
jump in new yuan loans last month, but for many analysts the
inflation and loan data carried a clear message: China will
have to keep raising interest rates.
"China's process of normalising monetary conditions is
going to accelerate," said Dong Tao, chief economist for
non-Japan Asia at Credit Suisse in Hong Kong.
"Inflation is higher than expected and, more importantly,
the authorities are giving up the thought that inflation is
going to peak soon, which means that they have to take a new
look at the inflation outlook and also take the so-called
quantitative easing into consideration."
(For a story on the latest China data, see ID:nTOE6A707N])
China's complaints are being aired at a contentious Group
of 20 meeting in Seoul that kicked off on Thursday. A
breakthrough on alleviating economic imbalances could herald
knee-jerk buying of risky assets and halt a U.S. dollar rally
that has lifted it to a 1-month high. []
The Nikkei rose 0.3 percent <> after closing above the
38.2 percent retracement of its move down from April to lows
for the year hit in September. That level is important for
traders who focus purely on historical chart patters to make
decisions.
Shares of big exporters such as Toyota Motor Co <7203.T>
and Canon Inc <7751.T> were among the biggest lifts to the
index, with the dollar up nearly 2 yen in November.
So far in November, the 7.4 percent gain in the Nikkei,
Asia's second-worst performing equity index year to date, is
higher than a 3 percent rise in the U.S. S&P 500 index <.SPX>
and a roughly 2 percent increase in the FTSEurofirst 300 index
<>.
The MSCI index of Asia Pacific shares outside Japan rose
0.7 percent <.MIAPJ0000PUS>, trying to snap a string of three
down days on strength in resource-related shares.
Hong Kong's Hang Seng index was up 1 percent <>, with
mainland Chinese stocks listed in the territory up 1.2 percent
<.HSCE>. Bank stocks were leading the charge after new yuan
loan figures for October were higher than expected, turning the
market's attention away from reserve requirement increase for
Chinese banks on Wednesday. []
The Australian dollar <AUD=> was trading nearly unchanged
on the day, fighting back after the country's unemployment rate
unexpectedly rose to 5.4 percent, reducing the chances of a
rate increase in February, and China's higher-than-expected
CPI.
With the fundamental outlook for Australia still
convincingly positive, the Reserve Bank of Australia may have
to raise rates again in coming months and therefore the
currency would unlikely stay down for long.
"Strong levels of participation are consistent with a
strong and healthy labour market. Unemployment remains in the
5.1-5.4 percent that has been in all year. It remains
consistent with the RBA's tightening bias," Su-Lin Ong, senior
economist with RBC Capital Markets in Sydney, said.
The U.S. dollar index <=USD>, a measure of the currency's
performance against a basket of six other major currencies, was
down 0.2 percent though still 0.8 percent higher so far in
November.
Bets against the dollar had grown significant in the run up
to the Fed's highly anticipated quantitative easing last week,
causing dealers to trim positions with an eye on the year end.
Commodity traders took advantage of the pause on the
dollar's rally and focused on the solid retail sales and
investment numbers out of China.
Three-month copper on the London Metal Exchange <CMCU3>
rose to a record high of $8,945 a tonne at 0220 GMT. When the
data first started to emerge copper was flat at $8,760.
Crude for December delivery was up 0.5 percent to $88.28 a
barrel <CLc1>, the highest since October 2008.
(Editing by Kim Coghill)
