Asian shares recouped early losses yesterday while commodities won a break from recent selling pressure after a reading on China's massive factory sector outpaced the market's bleak expectations.
The HSBC flash reading on manufacturing (PMI) for September rose to 50.5, from 50.2 in August and confounding forecasts for a dip to 50.
The market had been braced for something even worse and the relief helped Chinese stocks move into the black and the Australian dollar hop higher. The Asian giant is Australia's single biggest export market and investors often use the currency as a liquid proxy for China plays.
Annette Beacher, head of Asia-Pacific research at TD Securities, noted the flash PMIs had averaged 50.9 for the third quarter, a pickup over the previous quarter's 49.6.
"After the dismal industrial production print for August, financial markets were increasingly of the view that China is slowing at a more rapid pace than desired, so today’s print provides a welcome offset," said Beacher.
The Shanghai Composite Index added 0.9% and the CSI300 of the leading Shanghai and Shenzhen A-share listings bounced 0.8%.
Australia's main index swung smartly higher to be up 1%, while MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2%.
Japanese markets were shut for a holiday.
In Europe, financial spread betters expected only minor early moves for the FTSE 100, DAX and CAC 40.
Hindering sentiment was news the United States and partner nations were carrying out the first air strikes against Islamic State targets in Syria, a far more complicated front in the battle against militants. Shares had begun badly after Wall Street took a dip overnight. The Dow. DJI had ended Monday down 0.62%, while the S&P 500 lost 0.8% and the Nasdaq 1.14%.
The drop in the S&P was the biggest one-day decline since early August and was caused in part by a soft reading on US existing home sales which hit shares in building companies.