Tokyo stocks rose broadly Friday on short-covering after Wall Street's overnight rally, with tire maker Bridgestone and other names with specific buy catalysts posting big gains.

The broader market's upside was limited as players await a number of key economic indicators due next week, however.

Market observers say several upcoming key economic indicators may provide fresh trading cues for stock prices, specifically Japan industrial output data, the Bank of Japan's upcoming tankan survey, the US ISM manufacturing index and US payrolls data, all due next week.

The Nikkei 225 Stock Average rose 81.31 points, or 0.8%, to 9877.39. The Topix index of all the Tokyo Stock Exchange First Section issues rose 7.03 points, or 0.8%, to 926.80.

Volume was relatively light at about 1.9 billion shares.

The Nikkei gained 0.9% for the week, and is up 3.7% thus far for June.

September Nikkei 225 futures ended up 110 points, or 1.1%, at 9900, with resistance holding at 9955, the contract's overnight Chicago close.

While short-covering supported many sectors in the cash market, share-specific catalysts helped select names such as Bridgestone, which surged 8.5% to Y1,520 after saying late Thursday it now expects a stronger-than-expected Y56 billion profit for 2009. The news came as a big surprise to many analysts.

Nippon Oil gained 3.1% to Y570 after the Yomiuri Shimbun reported that a consortium of three Japanese firms including Nippon Oil leads the bidding to develop Iraq's Nassiriyah oil field. Its consortium partners Inpex and JGC also closed higher.

Suzuki Motor added 5.5% to Y2,195 after Manager Magazin reported Volkswagen is considering taking a stake of around 10% in the Japanese automaker. A Japanese brokerage analyst was pleased to see Suzuki's ability to explore partnership options in the wake of the firm's involvement with troubled GM.

Pioneer surged 10% to Y297 after JPMorgan raised its rating to Neutral and hiked its target price to Y275 from Y155, citing the company's restructuring efforts, its Y40 billion capital raising plan, and car navigation system demand recovery.

Real estate stocks were also firmly higher on short-covering, with Mitsui Fudosan rising 3% to Y1,665. The Topix real estate subindex, which rose 2.1%, was the second-best performer Friday.

SOUTH KOREA

South Korean shares ended up Friday for a third straight session on eased uncertainties following a FOMC meeting and a technical rebound from last week's falls.

The benchmark Korea Composite Stock Price Index, or Kospi, inched up 1.80 points, or 0.1%, to close at 1394.53 after trading between 1388.38 and 1404.01.

Foreign investors have been on the buying side since the Federal Reserve Wednesday put the policy rate on hold near zero as expected.

Foreigners bought a net KRW196.92 billion ($153 million) worth of shares, while institutions and individual investors were net sellers of KRW170.07 billion and KRW30.12 billion worth of shares, respectively, on Friday.

For next week, market analysts pegged the benchmark index at the 1360-1450 range, with the second quarter earnings season just around the corner.

On Friday, utility, auto parts and information and technology stocks supported the market, while others fell mostly on profit-taking.

Korea Gas Corp. and Korea Electric Power Corp. benefited from a government plan to raise electricity and gas charges by 3.9%-7.9% from Saturday to help support utility companies' earnings.

Korea Gas rose 4.3% at KRW46,600 and Korea Electric Power was up 0.3% at KRW29,500.

Other gainers included Samsung Electronics, up 1.4% at KRW596,000 and LG Electronics up 1.3% at KRW118,500; Hyundai Mobis up 3.6% at KRW114,500; Hankook Tire Manufacturing up 6.3% at KRW16,850.

They closed higher on positive outlook for second-quarter earnings results amid recovering demand, though not a steep one, analysts said.

Among losers, Doosan Heavy Industries & Construction fell 5% at KRW65,100 on sale of treasury shares worth $154 million to improve its financial status.

HONG KONG

Strength on Wall Street and investment portfolio inflows led Hong Kong shares higher Friday, after the benchmark index rose for two consecutive days on gains in property companies.

Analysts said they expect the city's benchmark index to test the psychologically important 19,000 level in the run-up to the end of the month on window-dressing activities.

The blue-chip Hang Seng Index rose 325.23 points, or 1.78%, to 18,600.26 after trading between 18,360.71 and 18,688.11 during the session.

Turnover totaled HK$62.53 billion, up from HK$60.23 billion Thursday.

Continued capital inflows prompted the Hong Kong Monetary Authority to intervene during the New York trading session Thursday. It sold HK$2.713 billion at the strong side of the Hong Kong Dollar's trading band.

Railway operator MTRC rose 3.22% to HK$24.05, catching up with the recent rally in property developers.

Daiwa Institute of Research said MTRC's property component is undervalued. The implied value of its property assets is valued at HK$13.29 a share versus HK$4.72 after stripping out its railway assets.

Most major developers rose for the third straight day. Hang Lung Properties surged 5.4% to HK$26.55, and Cheung Kong was up 2.6% at HK$93.20.

Hong Kong Exchanges & Clearing, the local bourse operator, rose 2.5% to HK$126.70 on the market's recent gains and increased turnover.

Wing Hang Bank jumped 10.5% to HK$74.00, extending a 9% rise Thursday on market speculation that Industrial & Commercial Bank of China may seek to acquire the Hong Kong lender. However, Wing Hang said it isn't involved in acquisition talks and is unaware of any reasons for the recent surge in its share price.

Higher prices for base metals and crude oil overnight helped commodity and energy companies.

Front-month Nymex crude oil futures rose 21 cents to $70.44 a barrel in Asian trade, adding to an overnight gain of $1.45, or 2.3%. Aluminum fell $4 to $1,680/ton on the London Metal Exchange, after rising $73 overnight.

Chalco rose 3.5% to HK$7.77. Cnooc was 3.0% higher at HK$9.91, and PetroChina ended 2.6% higher at HK$8.68.

CHINA

China's shares edged higher to a new 11-month high Friday as banks and real estate rose strongly on optimism about the economy but other stocks were lackluster.

The benchmark Shanghai Composite Index rose 3.17 points, or 0.1%, to close at 2928.21, narrowly surpassing Wednesday's close of 2922.3, the market's highest level since last July 17. The Shenzhen Composite Index for China's smaller second market added 4.27 points, or 0.5%, to 958.68.

Industrial & Commercial Bank of China Ltd., the country's biggest commercial lender, rose 2% to 5.55 RMB, while No. 2 China Construction Bank Ltd. rose 1.2% to 6.17 RMB. Midsize lender Pudong Development Bank Ltd. rose 3.6% to 22.94 RMB.

Real estate shares rose on expectations that inflation, which has fallen sharply this year, will pick up, making hard assets such as housing more valuable.

Poly Real Estate Group, the country's biggest developer, rose 1.5% to 26.64 RMB, while rival China Vanke Ltd. added 1.1% to 12.60 RMB.

Shares in dairies, tourism companies and metals producers were flat to lower.

Baosteel Group, China's biggest steel producer, fell 1.4% to 7.20 RMB, while Aluminum Corp. of China, or Chinalco, lost 1% to 11.95 RMB.

TAIWAN

Taiwan stocks closed 0.09% higher on Friday at a two-week closing high after Taiwan's central bank kept rates steady, keeping the cost of lending low and boosting property shares such as Farglory.

The main TAIEX share index ended 5.95 points higher at 6,463.56, its highest close since June 11.

The index gained 3.73% this week, making it the best performer among the 30 global indexes tracked by Reuters.

Turnover was light at T$107 billion ($3.25 billion), highlighting investor worries about the sustainability of the current rally and continued concerns over corporate profitability amid the economic slowdown.

Taiwan's central bank left the benchmark discount rate unchanged at a record low of 1.25% for the second straight time on Thursday, and said it would only consider lifting rates when the economy returns to pre-crisis levels.

Real estate developer Farglory led gains in the sector, closing 5.46% higher. The broader construction sub-index rose 1.02% as investors bet that low interest rates would lead to a spike in home sales.

However, technology shares slipped, reversing earlier gains as investors fretted that consumer demand in the West remained weak, possibly hurting the bottom lines of Taiwan's many export-reliant tech companies.

Hon Hai, Taiwan's largest electronics maker, fell 1.45% even after a local newspaper reported that it would be the contract manufacturer for one of Hewlett-Packard's laptop PCs.

Powerchip Semiconductor, Taiwan's biggest DRAM chipmaker, fell 3.55% after it said on Friday that its capital spending this year would likely fall below T$5 billion, which is lower than previously forecast.

Analysts warned that it was unlikely the TAIEX would climb past 6,500 next week as most investors had already taken into consideration China hopes when buying into the market.

THE PHILIPPINES

Despite the overnight rally posted by US stocks, Philippine share prices on Friday only managed to post slight gains, indicating cautiousness among investors.

The main Philippine Stock Exchange index rose 9.88 points or 0.4004% to 2,477.44, while the broader all shares climbed 5.92 points or 0.3737% to 1,590.16.

Market breadth was positive with 71 gainers against 25 losers and 57 stocks which closed unchanged.

Four of the six sub-indices ended higher, while Financials and Mining and Oil sectors dipped, declining by 0.5149% and 0.1114-percent respectively. Also, thirteen of the 20 most active stocks for the day closed in the green.

Telecommunications giant Philippine Long Distance Telephone Co., the day's top-traded, leaped P10 or 0.4211% to P2,385.

Sy holding firm SM Investments Corp., which has interest in mall operations, property development and banking, jumped P2.50 or 0.8197% to P307.50.

San Miguel Corp. "B" shares, which are open to foreigners, and "A" shares both advanced P1 or 1.5504% to P65.50.

Alternative power producer PNOC-Energy Development Corp. was steady at P3.90.

Volume traded reached 1.027 billion valued at about P3.025 billion.

INDONESIA

Bucking the regional trend, Indonesia's Jakarta Composite inched down 0.2%.

The Index was pulled down by a 7.2% fall in Bank Central Asia and a 1.5% loss in top lender Bank Mandiri.

SINGAPORE

Singapore share prices rose for a third straight session on Friday, mirroring other regional markets that advanced on hopes for a global economic rebound.

The blue-chip Straits Times Index closed 15.49 points, or 0.67%, higher at 2,317.95. Volume was 1.49 billion shares worth $1.39 billion (US$959 million).

Risers outnumbered decliners 247 to 203, with 892 issues unchanged.

Analysts said however the market's gains will be limited by the absence of fresh leads and concerns that any recovery from the global downturn will be slow.

Bank stocks were mixed, with DBS rising 10 cents to $11.66, Oversea-Chinese Banking Corp even at $6.60 and United Overseas Bank down 20 cents to $14.40.

In the property sector, CapitaLand eased two cents to $3.75, while City Developments climbed 13 cents to $8.93 and Keppel Land added five cents to $2.30.

Singapore Airlines was flat at $12.64 and Singapore Telecom advanced two cents to $3.01.

MALAYSIA

Share prices on Bursa Malaysia finished mostly higher Friday as the market recouped some of its earlier losses driven by gains in selected bluechips, dealers said.

However, some profit taking narrowed overall gains as investors took the opportunity to accumulate their profits ahead of the weekend.

The Composite Index rose 1.66 points to 1,075.77.

A dealer from an investment bank said the market will likely consolidate, with the composite index moving within the range of 1,065 to 1,090 next week.

The Industrial Index gained 4.31 points to 2,346.57, the Technology Index gained 0.05 of a point to 14.44, the Plantation Index declined 2.17 points to 5,396 and the Finance Index slipped 4.68 points to 8,523.17.

The FBMEmas Index gained 12.82 points to 7,211.46, the FBM30 Index went up 14.95 points to 6,905.91, the FBM2BRD Index was 3.08 points higher at 4,798.8 and the FBMMesdaq Index decreased 8.64 points to 4,116.97.

Losers outnumbered gainers 323 to 293, while 234 counters were unchanged, 376 untraded and 35 others suspended.

Turnover was lower at 1.203 billion shares worth RM1.247 billion from 1.493 billion shares worth RM1.522 billion Thursday.

Among actives, KNM Group declined 1.5 sen to 86.5 sen while UEM Land rose seven sen to RM1.63.

UEM Land, which reported that its sale and purchase agreement with Dubai-based developer Damac Properties has lapsed, saw considerable interest during the week.

Salcon meanwhile rose 3.5 sen to 58.5 sen. The share garnered some interest after its subsidiary, Salcon Engineering -- a water infrastructrue specialist -- reported that it was bidding for RM1.5 billion worth of projects.

As for heavyweights, Maybank declined 10 sen to RM5.80, Sime Darby gained five sen to RM6.90, Tenaga slipped five sen to RM7.75 and Bumiputra-Commerce Holdings rose 15 sen to RM9.10.

THAILAND

The Thai SET was up 0.9%, with PTT Exploration up 1.9% and PTT 0.9% higher.

Siam Commercial Bank and Kasikornbank both fell 0.4%.

Dealers said market sentiment in Bangkok was cautious ahead of an anti-government rally by red-shirted supporters of former premier Thaksin Shinawatra at the weekend.

Thai Oil, the top oil refiner extended earlier gains and rose 2.2% to a four-day high of 35.50 baht after the company told Reuters it could meet analysts' 2009 profit forecast after a recovery in crude prices, and it would produce at full capacity this year despite the recession in Thailand.

Shares in Krung Thai Bank, Thailand's second-largest lender rose 1.8% to 8.40 baht after the bank said its 2009 loan growth target of 5% was achievable and reported strong lending in the first five months.

INDIA

For the week, Sensex rose by 1.7% to close at 14,765. Nifty rose 1.4% to shut shop at 4,376.

The June series may have ended with a whimper but the July series has started with a bang, mainly on account of strong global markets. Concerns over below-normal monsoon dragged the Indian indices lower in the initial part of the week. Expiry of derivatives contracts for the June series and introduction of free-float methodology in Nifty led to the volatile movement on the bourses. Finally, the BSE Sensex rose by 1.7% during the week to close at 14,765. NSE Nifty rose 1.4% to shut shop at 4,376.

Sensex hit an intra-week high of 14,782 and low of 14,017 while, Nifty hit an intra-week high of 4,383 and low of 4,143.

The Foreign Institutional Investors sold stocks worth Rs19.98bn during the week. On the other hand, the Domestic Institutional Investors bought stocks worth Rs11.29bn during the week.

The top gainers: The top gainers in the Sensex were L&T (up 7.6%), ACC (up 6.7%), HDFC (up 6.3%), ICICI Bank (up 5.9%) and Grasim (up 5.6%).

The Top Losers: The top losers in the Sensex were Ranbaxy (down 9.2%), Tata Steel (down 5.8%), Hero Honda (down 4%), HDFC Bank (down 3.9%) and ITC (down 1.9%).

The BSE IT Index (up 3%): The top gainers in the IT sector were Sasken Communication (up 16.5%), Patni (up 12.4%), Oracle Financial (up 5.2%), TCS (up 4.6%) and Mphasis (up 4.3%).

However, Satyam Computer slipped 6.1% during the week. Tech Mahindra clarified that there has been no decision by the Boards of Tech Mahindra and Satyam about merger of the two Companies. Earlier media reports had stated that a possible merger of Tech Mahindra Ltd and Satyam Computer Services Ltd.

The BSE Consumer Index: The top gainers in the consumer durables space were Videocon Industries (up 6.5%), Su-Raj Diamonds (up 4.5%), Whirlpool of Ind (up 3.5%), Blue Star Ltd (up 2.5%) and Mirc Electronics (up 2.1%).

Titan fell 3.5% during the week.

The BSE Healthcare Index (down 0.7%): Sun Pharma was the top loser. The stock lost 13% after reports stated that the US authorities seized generic drugs made by Caraco Pharmaceutical Laboratories Ltd (US subsidiary of Sun Pharma). They are investigating potential claims against Caraco Pharma, concerning possible securities violations related to public statements made by the company. Sun Pharmaceutical owns 76% of Caraco's stock.

Panacea Biotec (down 12.6%), Ranbaxy Labs (down 9.2%), Zandu Pharma (down 4.7%) and Orchid Chem (down 4.3%).

The top gainers in the Pharma sector were Dishman Pharma (up 14.9%), Cadila Healthcare (up 14.1%) and Torrent Pharma (up 9.3%).

Aurobindo Pharma surged over 12% during the week. The company got an approval from Medicines Control Council, South Africa to manufacture and market five more products in South Africa.

Wockhardt rose over 7% in the week. According to reports, the company may issue preference shares to its lenders against some of its derivative losses. The company may also get nearly a decade to repay its local borrowings as part of the corporate debt restructuring program, added reports.

The BSE Banking Index (up 2.5%): The top gainer in the banking space was Union Bank of India. The stock rose over 8% during the week. The bank announced that it raised additional capital to the extent of Rs5bn by issue of Unsecured Redeemable Non Convertible Subordinated Upper Tier II Bonds.

Among the other major gainers were Axis Bank (up 8.2%), Yes Bank (up 7.6%) and Karnataka Bank (up 7.3%) and ICICI Bank (up 5.9%).

The top losers were HDFC Bank (down 3.9%) and Andhra Bank (down 0.9%).

Inflation fell for a second successive week, largely owing to last year's high base and partly due to the slowdown in the economy. The annual, point-to-point inflation stood at (-)1.14% in the week ended June 13, 2009 as compared to (-)1.61% in the previous week. It was at 11.8% during the corresponding week (June 14, 2008) of the previous year.

However, the WPI for 'All Commodities' rose by 0.6% to 234.2 from 232.7 in the week ended June 6, 2009. The wholesale price index published Friday may be revised in two months, after the government receives additional price data.

The BSE Auto Index (down 1.1%): The top losers were M&M (down 5.1%), Hero Honda (down 4%) and Hindustan Motors (down 0.5%)

Tata Motors slipped by 1.5% during the week. The company reported a full year group loss of Rs25.1bn.

It reported consolidated gross revenue of Rs741.51bn in 2008-09. The consolidated financial performance of the company is not comparable to 2007-08 on account of the acquisition of Jaquar Land Rover in June 2008. In 2007-08, the consolidated gross revenue was Rs403.40bn.

The top gainers were Eicher Motors (up 5%), Swaraj Mazda (up 3.8%) and Maruti Suzuki (up 0.9%).

Ashok Leyland surged by 4% during the week. The company deferred a further plan to build a new factory near Chennai for manufacturing light commercial vehicles in partnership with Japanese auto major Nissan, stated reports.

Bajaj Auto was up by over 3% during the week. The company announced the launch of 2009 Pulsar 220 edition. With this launch, Bajaj Auto raised the bar in performance biking segment quite a few notches higher - the Pulsar 220 has now evolved to become the fastest Indian with the amazing top speed of 144 km/hr.

The BSE Oil & Gas Index (0.0%): The top gainers in the oil & gas space were Gujarat NRE Coke (up 9.3%), Shiv-Vani Oil (up 8.8%) and Essar Oil (up 3.7%).

Great Offshore was in the limelight during the week, the stock was up by over 6%. Bharati Shipyard on June 23, acquired 16,99,611 equity shares of Rs10 each of Great Offshore constituting 4.58% of the current paid-up share capital of the target company, at a price of Rs403 per share through a block deal. The transaction was done with some members of the Sheth family, the original promoters of Great Offshore. The deal took place shortly after ABG Shipyard threw its hat in the ring for the acquisition of a substantial stake in Great Offshore. ABG Shipyard offered a prive of Rs375 per share to acquire close to 32% stake in Great Offshore.

ONGC was down by 3.5% during the week. The company posted a net profit of Rs22.07bn a decline of 16% YoY for the quarter ended March 31 2009 as compared to Rs26.27bn for the quarter ended March 31, 2008. Total Income has decreased from Rs176.50bn for the quarter ended March 31, 2008 to Rs151.13bn for the quarter ended March 31, 2009

AUSTRALIA

The Australian share market notched up its third consecutive daily gain Friday to close marginally higher for the week, courtesy of stronger global equities and commodities markets.

The benchmark S&P/ASX 200 index closed up 47.8 points or 1.2% at 3903.8 after hitting a four-day high of 3915.6.

Despite hopes of financial year end buying from domestic funds, the Australian share market basically kept pace with offshore markets, with Japan's Nikkei 225 up 0.9% and Hong Kong's Heng Seng up 1.2% late.

Australian share market trading volume was light after allowing for activity surrounding Thursday's options expiry.

While most sectors rose, gains weren't as broad based as Thursday, with resources underperforming, while financials underpinned the market.

Among financials, National Australia Bank rose 3.7% to A$22.30, Commonwealth Bank rose 3.0% to A$38.66, QBE rose 4.2% to A$19.75, and Macquarie Group rose 5.1% to A$37.77.

Bank of Queensland pared early gains after confirming it was subject to an investigation by corporate watchdog ASIC. The bank wasn't immediately available to comment. Its shares ended up 3.4% at A$8.75.

In resources, BHP Billiton fell 1.0% to close at A$34.18, well below its ADR equivalent closing price of A$34.77. Rio Tinto also lost ground, falling 1.5% to A$51.00.

Alumina surged 8.7% to A$1.50 after the Australian Financial Review said BHP could look at buying it, although traders said the article was "drawing a long bow."

Energy stocks also performed strongly, with Woodside Petroleum rising 2.0% to A$42.88 and Santos up 1.9% to A$14.43 after crude oil recovered overnight.

Caltex rose 3.8% to A$13.19 after flagging vastly improved first half profit numbers in August. The oil refiner, 50%-owned by Chevron Corp., said it expects its replacement cost of sales operating profit, or RCOP, which smoothes out oil price volatility, to rise to between A$270 million and A$295 million for the six months to June 30, versus A$196 million in the previous corresponding half.

Qantas closed up 3.5 cents at A$2.01 after it canceled delivery of some Boeing 787 aircraft and deferred orders for others, reflecting a dramatic downturn in the industry since the orders were placed.

Cabcharge Australia was one of the biggest losers of the day. Its shares closed down 13.5% at A$5.50 after the antitrust regulator said it had instituted legal proceeding against the company for alleged breaches of the Trades Practices Act.

NEW ZEALAND

New Zealand shares ended flat Friday despite strong leads from offshore markets.

The benchmark NZX-50 ended flat at 2770.62. "It was a bit of a flop," said Brad Gordon, adviser at Macquarie Equities.

The index was weighed by a 0.8% fall in bellwether Telecom to NZ$2.65. Gordon said investors seemed to be moving some funds out of defensive stocks like Telecom and Contact Energy, which shed 1.1% to NZ$5.65 in order to pick up some cyclical stocks.

National carrier Air New Zealand gained 1.1% to NZ$0.92 while retailers also fared better. Children's clothing maker Pumpkin Patch gained 2.4% to NZ$1.28 while discount retailer The Warehouse ended 1.1% higher at NZ$3.74.

Construction company Fletcher Building pared early losses to end up 0.2% at NZ$6.40. Earlier Friday the company said it was closing a medium density fiber-board, or MDF, in Perth, Western Australia in response to reduced demand and over capacity.

The stock may also have been weighed down by weaker-than-expected first quarter gross domestic product data.

Statistics New Zealand said real, seasonally adjusted production-based gross domestic product contracted 1.0% on the quarter in the three months ended March 31, after it contracted a revised 1.0% in the fourth quarter. The quarterly figure overshot the median 0.7% contraction forecast in a Dow Jones Newswires poll of 13 market economists.

Whiteware maker Fisher & Paykel Appliances shed 2.9% to NZ$0.66. Brokers said investors are keen to see more detail about the ramifications of China's appliances maker Haier taking a 20% stake in the company.

Export stocks shrugged off a stronger currency with medical devices maker Fisher & Paykel Healthcare gaining 1.0% to NZ$2.96 and technology concern Rakon adding 4.9% to NZ$1.50.

Rural services company PGG Wrightson added 4.4% to NZ$1.18, bouncing back after a sharp fall in the wake of its profit downgrade Wednesday.

China will prevent the RMB from strengthening against the Dollar for a second consecutive year as Premier Wen Jiabao seeks to protect jobs and support exports, the forwards market shows.

Contracts based on the currency's value in a year show investors are betting the RMB will rise less than 1% to 6.7695, compared with a 2.4% gain indicated on June 1. It ended Thursday at 6.8347 in Shanghai. The central bank kept the spot rate within a range of 0.08 RMB since July 1, 2008, as the global credit crisis deepened.

Another year of little appreciation would make it easier for Chinese manufacturers to keep prices low for consumers in the United States and Europe, helping to stem a seven-month slide in exports that has forced them to close factories. It would also limit China's spending power when importing raw materials and luxury goods, fuelling tension with trading partners.

The government kept the RMB stable in the past year after the currency gained 21% against the Dollar between July 2005 and July 2008. The past year's shift in policy surprised forwards traders, who on July 1, 2008, were betting on appreciation of 6% over 12 months. The central bank has not announced any change in the exchange-rate regime.

US Treasury Secretary Timothy Geithner urged China on June 1 to allow more flexibility in the RMB and said the Asian economy should rely more on domestic demand than exports to power growth. He also stressed the need for market-set interest rates and exchange rates to manage the economy.

Last year's 17% increase in China's exports helped widen trade gaps with the US and Europe and boosted the nation's foreign-exchange reserves, which reach a record $1.95 trillion in March.

Premier Wen said in separate speeches this month that his priorities are to create jobs and protect an economy entering a "crucial phase." China's target of 8% growth in 2009 contrasts with a World Bank forecast that the global economy will shrink by 2.9%.

China's 12-month non-deliverable forward contract slumped almost 8% in the second half of last year after the collapse of Lehman Brothers Holdings Inc. on Sept. 15 caused investors to hoard Dollars and dump emerging-market currencies. It climbed almost 5% in the first five months of this year as the Dollar declined and has weakened 1.2% so far this month as traders pared bets for appreciation.

Forwards are agreements to buy and sell assets at current prices for delivery at a specified date. Non-deliverable contracts, settled in Dollars because the RMB is not convertible, are the most-popular way for global investors and multinational companies to hedge and speculate on the exchange rate. Average daily turnover climbed to $1 billion last year, from $50 million in 2004, according to Deutsche Bank AG estimates cited by the Asian Development Bank.

Companies involved in overseas trade employ about 80 million workers, 60% of whom are from rural areas, according to commerce ministry estimates. About 225 million people, or 28% of the rural population, are migrant workers who have left their farms in search of work in cities. As many as 30 million of them have lost their jobs during the global financial crisis, according to the State Council's Development & Research Center.

The number of migrant workers losing their jobs has more than doubled this year and they are "grumbling about a lack of support from the government," said Zhang Zhiru, head of Chun Feng Labor Dispute Service Organization in the southern city of Shenzhen. Chen Xiwen, a senior rural planning official, in February warned of the risk of "mass incidents and social unrest" as jobless migrants return to the countryside.

The Chinese government will be able to maintain an exchange rate that favors its manufacturers because the US government needs its support to finance a widening budget deficit, said Chris Ruffle, who helps oversee $3 billion of assets as co-chairman of Martin Currie Investment Management Ltd.'s China unit in Shanghai.

China, the biggest foreign holder of US government debt, cut its holdings by $4.4 billion to $763.5 billion in April, the first monthly reduction since February 2008, according to US Treasury Department data.

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Police have detained two senior executives from Guangdong Development Bank, a mid-sized Chinese lender in which Citigroup owns 20%, on suspicion of economic crimes.

Wang Xin, GDB's vice-president, and another unnamed department head, were detained last week in connection with unspecified economic crimes, a source with direct knowledge of the matter told the Financial Times.

Li Ruohong, GDB's chairman, stepped down for health reasons last week after a long dispute over the terms of his departure but his resignation had nothing to do with the detention of the two executives, according to people familiar with the matter. The detentions, which were also reported in Chinese media, are just the latest in a string of scandals to hit the Chinese financial sector, where bribery and corruption are endemic and rules are constantly changing and often unclear.

Although no Citigroup employees were thought to be involved, the incident raises questions over the ability of foreign banks to influence and manage the operations of Chinese banks they invest in.

Foreign investors are limited to stakes in Chinese banks of less than 20% and total foreign ownership of each bank cannot exceed 25%.

In practice, western companies that have taken minority stakes in China's state-controlled banking sector - including Royal Bank of Scotland, Bank of America, UBS and Goldman Sachs - have been unable to exert much influence over management and in recent months most of those investors have sold down their stakes in Chinese banks.

Citigroup's investment has been troubled since the US bank led a consortium of state-owned Chinese companies, including China Life Insurance and the State Grid, to take a controlling stake in GDB in late 2006.

Soon after that investment Wang Xin was put in charge of integrating parts of GDB's business with that of the new shareholders and was also in charge of human relations and technology at the bank, according to Chinese media reports.

Last year five of the most senior Citigroup executives working at GDB resigned from their positions amid reports of serious disagreements within the bank's management.

A GDB executive confirmed their departure on Thursday but said it had nothing to do with last week's detentions.

In spite of its management problems, GDB's total assets have increased from Rmb374bn ($55bn) in 2006 to Rmb546bn by the end of 2008 and its capital adequacy ratio has improved from 6.7% to 11.6% over the same period.

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In an attempt to fight the economic crisis by boosting exports, China's ministry of commerce recently launched a campaign known as the "421 project".

Its goal is to secure $42.1bn of machinery and electronics orders within three months by mobilising the resources of the state, including the deep-pocketed Chinese banks.

This is one in a series of extraordinary measures Beijing has taken to boost its industries, particularly those hardest hit by a slump in trade that has seen demand for exports fall by about a quarter in the first five months from the same period a year earlier.

Tax rebates for exporters have been steadily raised and administrative "support measures", including cheap and abundant credit lines from state banks, have been announced for almost every big industry.

After complaining bitterly about the US's protectionist "Buy American" policy, Beijing has introduced its own policy to keep its stimulus money at home.

A Chinese government procurement law introduced in 2002 already included a clause requiring departments to favour Chinese goods and services whenever possible.

But that regulation had not been strictly observed in recent years, leading to outcries from domestic industry. Foreign companies say procurement has always been heavily skewed towards domestic suppliers but because China is not a signatory to the World Trade Organisation agreement on government procurement it is not breaking any international rules with the new edict. Foreign diplomats and business leaders say they fear this new policy will also apply to state-owned enterprises as well as direct government procurement.

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China Shipping Container Lines Co., the country's second-biggest box carrier, plans to almost double rates in Asia-Europe routes to as much as $650 per twenty-foot container next month even as demand weakens.

"Companies will raise rates, not because the market has recovered, but because the shipping lines have the resolution to do this," China Shipping Managing Director Huang Xiaowen said. "We have found that if we cut rates, load factors don't increase," he said in an interview in Shanghai Thursday. The company's Hong Kong-listed stock rose the most in three weeks.

The busiest season for sea-cargo box carriers traditionally starts on July 1, when rates are raised to cash in on European and US retailers stocking up for the back-to-school and holiday-shopping periods. Container rates have fallen in the past year, partly because retailers are paring orders on weak consumer spending.

"This peak season is going to be very short," China Shipping Chairman Li Shaode said in an interview in Shanghai Thursday. All 20 of the analysts covering the shipping line expect it to make a full-year loss. The median estimate is a 2.4 billion RMB ($351 million) deficit.

China Shipping will raise its rates by as much as $300 per twenty-foot container from July 1, Huang said.

The container line's stock jumped as much as 9% to HK$2.11 in Hong Kong trading, the biggest intraday climb since June 3. China Shipping traded at HK$2.09 at 12:25 p.m. local time, boosting its gain this year to 79%, compared with a 29% increase for the benchmark Hang Seng Index.

China Shipping will also raise rates on its Asia-South America routes by $300 per twenty-foot equivalent unit, or TEU, Huang said. Rates on Middle East, Australia and Mediterranean routes will also go up, he added.

Container freight rates have fallen as retailers import less clothing, furniture and other goods from factories in China and the rest of Asia. Saks Inc. expects to order 20% less from suppliers this year, Chief Executive Officer Stephen Sadove said June 22. VF Corp., maker of Wrangler jeans and JanSport backpacks, forecasts a drop of as much as 3% in deliveries this year, Chief Executive Officer Eric Wiseman said last month.