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* Shares ex-Japan power to highest in month
* China GDP rises 7.9 pct for second quarter
* U.S. share gains add to hope of recovery
* Fitch revises NZ outlook, kiwi falls
By Elaine Lies
TOKYO, July 16 (Reuters) - Asian shares jumped on Thursday,
buoyed by strong U.S. earnings and increasing global recovery
hopes after China's economy grew faster than forecast in the
second quarter.
But the New Zealand dollar fell after rating agency Fitch
revised the outlook on New Zealand's AA-plus long-term credit
rating to negative, sending the kiwi down against both the
dollar and the yen. [].
Tokyo shares hit a one-week high before paring gains, and
shares elsewhere in Asia-Pacific powered to their highest in a
month. The yen rose broadly as traders took profits in other
currencies and oil steadied above $61 a barrel.
European shares were expected to open mixed as investors
awaited U.S. and European earnings. []
Markets were keeping a wary eye on the fate of CIT Group
Inc <CIT.N>, a U.S. lender to thousands of small and mid-sized
businesses, after bailout talks with the government ended, a
move that could ultimately drive it to bankruptcy.
[]
The Fitch move on New Zealand's rating, which cut the
outlook to negative from stable, took some in the markets
aback.
"This was a bit of a surprise. It may refocus attention on
concerns about sovereign risk that had been receding for a
while," said Masafumi Yamamoto, head of FX strategy Japan at
Royal Bank of Scotland, referring to sovereign ratings in
general.
Coupled with CIT's woes and Standard & Poor's downgrade of
California's long-term rating and underlying rating on the
state's economic recovery bonds, Fitch's decision may put the
spotlight back on credit risks, he added.
But broader markets were buoyed by China's second quarter
gross domestic product rising 7.9 percent against the previous
year, beating expectations for a 7.5 percent rise, while the
world's third-largest economy grew 7.1 percent in the first
half against a year earlier.
The news came on the back of a surge in U.S. stocks on
Wednesday after the release of data suggesting the recession is
abating and results from bellwether Intel Corp <INTC.O> beat
expectations. [] []
"There seems to be no shortage of immediate supportive
factors for the market, with the yen weakening further and
China's GDP coming in strong," said Tomomi Yamashita, a senior
fund manager at Shinkin Asset Management, though he added that
investors remain wary about upcoming U.S. earnings.
Asian shares across the region rose 1.3 percent to their
highest since mid-June, though they were off earlier highs.
<.MIAPJ0000PUS>
Japan's benchmark Nikkei <> underperformed with a rise
of 0.8 percent to 9,344.16 as caution about U.S. earnings pared
earlier gains.
Mazda Motor Corp <7261.T> rose 6.2 percent after two
sources familiar with the matter said it was in talks with
Toyota Motor Corp <7203.T. over Toyota supplying its smaller
rival with core components for hybrid vehicles. Toyota gained
0.9 percent. []
Australian shares rose nearly 1.8 percent and briefly
touched a one-month high as miners rose on firmer base metals
prices.
KIWI STRUGGLES
Fitch affirmed New Zealand's sovereign AA-plus long-term
foreign currency rating and the long-term local currency rating
at AAA, but revised the outlook down from stable, implying a
50:50 chance of a downgrade in the next 12-24 months.
The NZ dollar slid 1.3 percent to $0.6403 <NZD=> and
dropped 1.9 percent to 60.14 yen <NZDJPY=R>.
The timing of the move took some by surprise given that
Standard & Poor's had raised its outlook to stable from
negative following the government budget on May 28. But others
took it in stride.
"It's somewhat surprising that we don't have a worse rating
outlook. To have a negative outlook seems reasonably
justifiable," said UBS senior economist Robin Clements.
The yen rose, with the euro slipping 0.5 percent to 132.21
yen <EURJPY=R> and the Australian dollar falling 1 percent to
75.01 yen <AUDJPY=R>. The dollar fell 0.3 percent to 93.87 yen.
Yields on U.S. 10-year Treasury notes <US10YT=RR> stood at
3.567 percent, down nearly four basis points from U.S. trade
but up from a two-month low of 3.26 percent hit on Monday.
September JGB futures fell 0.05 point to 138.59 <2JGBv1>,
sliding from a 3-1/2-mth peak of 138.97 hit last week.
Spot gold <XAU=> edged down slightly to 936.60 compared to
New York's notional close of $938.45. It jumped to a two-week
high the previous day when U.S. consumer prices data stoked
fears of rising inflation.
(Additional reporting by Masayuki Kitano and Shinichi
Saoshiro in Tokyo; Editing by Tomasz Janowski)
