Asian stocks rally following gains on Wall Street -

Asian stocks rally following gains on Wall Street

HONG KONG (AP) -- World stocks struggled to hold onto the week's gains as early declines on European markets on Thursday pared gains in Asian markets earlier in the day.

Oil rose fell below $89 a barrel while the dollar strengthened against the euro and the yen.

In early European trading, Britain's FTSE 100 fell 0.2 percent at 5,380.90 while France's CAC-40 fell 0.7 percent to 3,232.84. Germany's DAX fell 1.3 percent to 5,707.49.

U.S. stocks were poised to fall. Dow futures fell 0.3 percent to 11,569.00 while broader S&P 500 futures declined 0.4 percent to 1,212.90.

Asian stocks had risen strongly early in the day, driven by positive manufacturing data and hopes that the Federal Reserve may unveil another round of stimulus. But most markets lost steam by the close of trading.

Japan's benchmark Nikkei 225 advanced 1.2 percent to close at 9,060.80 while Hong Kong's Hang Seng edged up 0.2 percent to close at 20,585.33.

South Korea's Kospi was nearly unchanged, ending at 1,880.70 and Australia's S&P/ASX 200 rose 0.3 percent to finish at 4,307.50. Taiwan's benchmark gained but Singapore's declined.

Asian stocks had taken their early lead from gains in the U.S. following a surge in factory orders, which investors took as a sign that the manufacturing industry is still healthy. Some investors were also holding out hope the Federal Reserve may announce a third round of government bond purchases -- known as quantitative easing III or QE3 -- to support the economy because of worries the U.S. may slide back into recession. Analysts say a weak U.S. jobs report on Friday could push the Fed to act.

Mainland Chinese shares lost ground Thursday, with the benchmark Shanghai Composite Index slipping 0.4 percent, or 11.3 points, to 2,556.04 while the Shenzhen Composite Index fell 0.6 percent, or 6.59 points, to 1,136.75. Shares in financials and hotels advanced while shares in aviation and food-related companies weakened on profit-taking.

The market was reacting to mixed signals: data showing a gain in manufacturing in August, while Premier Wen Jiabao warned that further monetary tightening measures are likely, analysts said.

"The market could remain unstable and edge lower in the short-term," said Hu Yi, an analyst at China Jianyin Investment Securities.

China Merchants Bank Co. gained 1.4 percent while Shanxi Xinghuacun Fen Wine Factory Co. lost 3.8 percent.

In currencies, the euro dropped to $1.4310 from $1.4380 late Wednesday in New York. The dollar rose to 76.89 yen from 76.60 yen.

Benchmark oil for October delivery fell 35 cents to $88.46 in electronic trading on the New York Mercantile Exchange. Crude rose 9 cents to settle at $88.81 on Wednesday.

In London, Brent crude for October delivery rose 73 cents to $114.07 on the ICE Futures exchange.

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