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Asian shares rise but momentum fizzles on virus worries

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Copyright 2021 The Associated Press. All rights reserved.

A man walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Tuesday, Aug. 24, 2021. Asian shares gained Tuesday, boosted by a near-record rise on Wall Street, though the momentum began to fizzle out over worries about the economic fallout from surging coronavirus infections in the region. (AP Photo/Vincent Yu)

TOKYO – Asian shares gained Tuesday, boosted by a near-record rise on Wall Street, though the momentum began to fizzle out over worries about the economic fallout from surging coronavirus infections in the region.

Japan's benchmark Nikkei 225 rose 0.9% to finish at 27,732.10. South Korea's Kospi gained 1.6% to 3,139.86. Australia's S&P/ASX 200 rose 0.2% to 7,503.00. Hong Kong's Hang Seng added 1.8% to 25,559.67, while the Shanghai Composite was up 1.1% at 3,513.52.

Some parts of Asia have had slower vaccine rollouts than the U.S. and Europe and are at a greater risk for the more contagious delta variant.

“Outbreaks in Asia Pacific have led to new containment measures, disrupting production and trade in a region that accounts for 37% of global merchandise exports,” said Sara Johnson, executive director, global economics, IHS Markit. "Asia Pacific’s manufacturing hubs are the current hotspots for COVID-19."

She noted vaccination campaigns outside mainland China have been slow in Asia, hurting consumer spending, tourism, industrial production and exports. The IHS Markit manufacturing PMI surveys for July show deteriorating business conditions in Indonesia, Malaysia, Myanmar, Thailand and Vietnam. Cases of COVID-19 infections have been falling in India, Taiwan, and Indonesia, but rising in Japan, South Korea, Malaysia, the Philippines, and Vietnam.

"Risk-on sentiments largely followed through with the positive lead from U.S. indices overnight. Some catchup growth may be on watch, considering that Asian markets have been diverging in performance from their Western counterparts since June. Ongoing Covid-19 risks continue to be prevalent," said Yeap Jun Rong, market strategist at IG in Singapore.

On Wall Street on Monday, the S&P 500 rose 0.9%, lifted by technology, communication and financial stocks, after spending much of the day within striking distance of its own record high. The benchmark index ended less than 0.2% below its all-time high set a week ago.

Pfizer rose 2.5% after the Food & Drug Administration gave full approval to its COVID-19 vaccine. The vaccine had been under an emergency use authorization since December, but the full approval could convince some reluctant Americans to now get their shot and will likely give local authorities the legal backing to impose mandates.

BioNTech, a German drug manufacturer which developed the vaccine with Pfizer, jumped 9.6% on the news. Moderna, which developed a similar vaccine that uses the same technology, vaulted 7.5%.

The prospects of more vaccinations and signs of some easing in the growth rate of coronavirus cases, helped put investors in a buying mood, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

Hopefully, the FDA approval “increases the uptake of the vaccine,” said Samana. The market's gains "shouldn't be viewed as anything other than a vaccine rally.”

The S&P 500 rose 37.86 points to 4,479.53. The Dow Jones Industrial Average added 215.63 points, or 0.6%, to 35,335.71. The Nasdaq gained 227.99 points, or 1.5%, to 14,942.65, eclipsing its last all-time high set early this month.

Small-company stocks outgained the broader market. The Russell 2000 index picked up 40.70 points, or 1.9%, to 14,942.65.

The market remains in a summer slowdown, with late August being historically one of the slowest times for trading with the exception of the Christmas holiday season. Markets are expected to pick up in volume and volatility after the Labor Day weekend.

Investors will be looking to the Federal Reserve as the Kansas City Fed's annual conference in Jackson Hole, Wyoming starts later this week. It will likely provide Wall Street with more insight into what the Fed may do about inflation.

In energy trading, benchmark U.S. crude rose 41 cents to $66.05 a barrel. Brent crude, the international standard, added 48 cents to $69.23 a barrel.

In currency trading, the U.S. dollar edged up to 109.81 Japanese yen from 109.69 yen. The euro cost $1.1744, inching down from $1.1743.

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AP Business Writer Alex Veiga contributed.

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama