By Tommy Wilkes
NEW DELHI (Reuters) - Business sentiment among Asia's top companies rebounded in the fourth quarter to the second-highest level in almost three years, a Thomson Reuters/INSEAD survey showed, helped by a stronger U.S. economy and a plunge in oil prices.
The Thomson Reuters/INSEAD Asian Business Sentiment Index <.RACSI> increased to 72 in the fourth quarter from 66 in the previous three months. The result was only slightly below the 74 reading of the second quarter which was the highest since early 2012. A reading above 50 indicates an overall positive outlook.
Indian businesses provided the biggest boost to the index, with companies reporting a maximum score of 100 for the third consecutive quarter as they look to new Prime Minister Narendra Modi to speed up economic recovery.
Corporations in China, where worries about a slowdown in economic growth persist, were among the least positive with a reading of 50, coming in below Japan, which is stuck in recession, at 56.
U.S. unemployment fell to a six-year low in November, a signal that the world's biggest economy and a key export destination for Asian companies is healthier and its consumers are growing in confidence.
"The U.S.'s economic leadership is influencing expectations across the world, and the U.S. is really becoming stronger," said Antonio Fatas, a Singapore-based economics professor at INSEAD.
"Asia is a region where there is not massive uncertainty related to political risk. This is a region that grows with the world."
The rosier picture in the United States coincided with oil prices falling to five-year lows, boosting Asian economies dependent on imports of crude.
Fatas cautioned that uncertainty remained, not least in China where investors and companies are "sitting and waiting for data" to indicate how dramatically growth in Asia's largest economy is slowing.
Global economic uncertainty remained the biggest concern for Asian businesses during the quarter, the survey showed, as well as rising costs and other risks such as regulatory change.
"I am surprised that the U.S. and oil prices seem to have outweighed concerns about China and Europe. The downside risks to China's growth are significant, especially related to real estate and shadow banking," said Dariusz Kowalczyk, a senior economist at Credit Agricole.
Companies participating in the survey included Japanese drugs maker Daiichi Sankyo Co Ltd (T:4568), South Korea's Hyundai Heavy Industries Co Ltd (KS:009540) and Indian real estate developer DLF Ltd (NS:DLF).
The poll, by Thomson Reuters in association with INSEAD, a global management and business school, was conducted from Dec. 1-13.
Of the 116 companies that responded, 51 percent gave a positive outlook, while 42 percent reported a neutral outlook and 7 percent were negative.
AUSTRALIA, TAIWAN UP, JAPAN STAYS WEAK
Oil prices plunged during the quarter as supplies flooded the market while economic growth and energy demand were limited.
Frederic Neumann, co-head of Asian economic research at HSBC, said the fall was a "big relief for many Asian manufacturing exporters" and probably helped outweigh continued worries about the global economy.
"There are still lingering risks but the risks are probably manageable. Even though global growth is disappointing, businesses are more optimistic because they see moves towards structural reforms," he said, referring to policy changes in India, Indonesia and China.
In Australia - this year's chair of the Group of 20 major economies - companies were more positive. The country scored 85, up from 75 in the last quarter, while sentiment in Taiwan turned positive, jumping to 71 from 33.
The Philippines suffered the steepest decline in optimism, with a drop to 67 from 83, while Japanese sentiment remained poor as respondents worried about the domestic economy.
Positive sentiment among building firms was highest, doubling from last quarter to a one-year high of 100. This was followed by property developers with a score of 87 versus 63, and retail, which jumped to 84 from 63 to its best level since the survey began in 2009.
Shipping and financial companies were the least positive.
INSEAD's Fatas said the oil price fall was likely still being digested by individual Asian companies and would filter through to more positive outlooks across sectors in coming months.
"My expectation is that the next quarter will be better than this one."
(Editing by Christopher Cushing)