HONG KONG, China (CNN) -- Asian markets were buoyed on Monday as a report showed manufacturing output in China on the rise, while Asian governments agreed to create a $120 billion foreign currency reserve fund.
The CLSA China Manufacturing Purchasing Managers' Index rose sharply to 50.1 in April from 44.8 in March, signaling an expansion of the Chinese manufacturing sector for the first time in nine months.
Chinese manufacturers reported that improved domestic demand had led sales higher in April, the report said. "China's government has been extremely successful in stimulating investment," wrote Eric Fishwick, head of economic research as CLSA. "We hope that firmer domestic demand, as government spending gains traction, will keep (the index) above 50 in months to come."
Much of China's $600 billion stimulus is designed to help stimulate domestic spending, such as infrastructure projects and tax breaks to encourage consumer spending.
Meanwhile, China, South Korea and Japan announced a long-awaited deal with the Association of Southeast Asian Nations to create a $120 billion foreign-currency reserve to help weather future financial shocks.
China and Japan each pledged $38.4 billion, and South Korea will contribute $19.2 billion. The rest will come from the 10 ASEAN member states.
As a result, by midday the Hang Seng index in Hong Kong was up 4.2 percent and the TAIEX index in Taiwan was up by more than 5 percent.