In This Article:
* China's Caixin factory PMI hits best level in almost decade
* Australia shares hit four-week low, shrug central bank liquidity
* Despite stock pullback, S&P posts best August since 1986
* European stocks futures up 0.7% in early trade
By Paulina Duran and Alwyn Scott
SYDNEY/NEW YORK, Sept 1 (Reuters) - Asian stocks edged higher on Tuesday after strong readings on China's vast manufacturing sector offset the weak lead from a softer Wall Street session.
European shares are expected to rebound from Monday's falls with pan-European Euro Stoxx 50 futures up 0.74% in early trade.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, to regain some ground lost on Monday.
The Hang Seng Index in Hong Kong traded 0.3% higher while the Shanghai Composite also recovered early losses to stand 0.1% higher. Japan's Nikkei 225 erased early losses to trade flat.
The Caixin/Markit Manufacturing Purchasing Managers' Index(PMI) showed China's factory activity expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders this year.
The strong reading shows activity in the worlds' second-biggest economy is bouncing back, "as the world begins to come out of the enforced lockdown for the virus," said Ben Powell, chief investment strategist for Asia Pacific at the BlackRock's Investment Institute.
"With interest rates even lower for even longer," investors are likely to keep moving away from developed markets and government bonds, into other risky assets including Asian equities, Powell told Reuters.
Taiwan stocks gained 0.7% after the United States said on Monday it was establishing a new bilateral economic dialogue with the country, an initiative it said was designed to support Taipei.
Australia's S&P/ASX 200 was an outlier, declining to four-week lows on rising diplomatic tensions between Canberra and Beijing.
Investors shrugged off the Reserve Bank of Australia's move to unexpectedly boost cheap term funding for banks, as the economy looked set to post its worst contraction since the Great Depression.
"What we are seeing here is the slow but choppy export recovery that is taking a bit longer than maybe some market participants thought it would - and that's because markets remain largely out of sync," said Daniel Gerard, senior multi asset strategist at State Street Global Markets, based in Singapore.
"China's recovery is helping with the improvement of regional Asia exports, but Europe and North America imports lag."