Asia: China markets rally as factory activity picks up

China was the standout performer in Asian markets on Monday, as the latest manufacturing data for the country helped to underpin sentiment.

The Shanghai Composite index jumped 4.71% and Hong Kong's Hang Seng finished up 0.63% as figures showed that China's manufacturing activity improved from April.

The official manufacturing Purchasing Managers' Index nudged up to 50.2 in May from 50.1 points, in line with forecasts.

The HSBC manufacturing PMI also rose, to 49.2 from 49.1, although this was still below the 50-point threshold that separates expansion from contraction.

"The increase in the official PMI in May is consistent with rises seen in the HSBC flash PMI and the MNI business sentiment index, which suggest a stabilisation, or even an improvement, in growth momentum in May," said Nomura.

"We continue to expect more policy easing to counter the economic headwinds, with two more interest rate cuts and two
more reserve requirement ratio cuts over the rest of 2015," it added.

The data improved the fortunes of the copper market, with hopes of Chinese economic stimulus continuing to provide a floor. The three-month copper contract on the London Metal Exchange rose 0.4% to $6,040 a tonne on Monday, partially reversing the 1.3% slide in price on Friday.

In Japan, the Nikkei 225 reversed initial losses to end flat following eleven straight days of gains, as data showed that manufacturing activity expanded for the first time in two months in May. The Markit/JMMA flash Japan Manufacturing PMI rose to a seasonally adjusted 50.9 in May, unchanged from a preliminary reading but higher than a final 49.9 in April.

Separately, data showed that capital spending surged 7.3% during the first quarter compared with 2.8% during the same period time last year.

The yen was down at ¥124.04 against the dollar at 1105 BST.

Australia's ASX ended down 0.71% following mixed data releases.

Data released by the Australian Bureau of Statistics showed building approvals fell 4.4% in April from 2.9% a month earlier.

On the bright side, though, company gross operating profits increased 0.2% in the first quarter versus a 0.4% decline in the same period last year, and compared with expectations for no change. The manufacturing PMI, meanwhile, jumped into positive territory in May, printing at 52.3 from 48 in April.

In company news, Chinese brokerage Huatai Securities gained 4% following its debut in Hong Kong. Huatai's initial public offering was the world's seccond alrgest in 2015, raising $4.5bn.