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Asian Markets End Higher, Hong Kong Slumps

CNBC.com
Friday, 7 Dec 2007 | 5:16 AM ET

Asian markets finished mostly higher Friday, as worries about a U.S. recession eased after American President George W. Bush unveiled plans aimed at stemming U.S. home-loan foreclosures. Japan closed at a four-week high, but Hong Kong and South Korea finished firmly in the red.

The mortgage assistance plan will freeze interest-rate increases on adjustable-rate subprime
mortgages for five years, allaying worries that the troubled housing sector would tip the U.S. economy into a recession.

Investors continued to buy financial stocks on hopes that the worst of the credit problems may be over, with Australia's ANZ Banking Group, South Korea's Hana Financial Group and Citigroup's Tokyo shares all advanced.

The Nikkei 225 Average notched a one-month closing high, boosted by a weaker yen that powered exporters such as Toyota Motor upwards as well as an easing of fears about the health of the U.S. economy. Steel firms, construction and real estate also did well, though a majority of sectors rose on short covering by day traders, who provided most of the Tokyo's market activity.

South Korea's KOSPI ended a three-day winning streak to close lower, with shipbuilders and retailers such as Shinsegae battered by local investor selling on worries about the global economy and weak domestic consumption. Foreign buying re-emerged for banking titles after recent falls triggered by U.S. subprime woes had pulled their valuations sharply lower, and for chipmaker Hynix Semiconductor, on optimism over chip prices.

Australian shares rose 0.8 percent to a fresh four-week closing high, with U.S.-exposed firms such as James Hardie Industries gaining. Energy firms rose after oil prices jumped 3 dollars to above $90 a barrel following OPEC's output rollover and as weakness in the U.S. dollar propped up commodities. Woodside Petroleum, Santos and Oil Search.

Singapore's Straits Times Index made moderate gains of 0.2 percent. Leading the advancers were SembCorp Marine and CapitaCommercial.

Hong Kong stocks slumped before the end of trading and closed 2.4 percent lower, breaking a 7-day winning streak as investors took profits after strong gains in property and banking stocks, traders told AFX.

Chinese stocks closed 1.3 percent higher as the market settled down after Wednesday's announcement of a shift to tighter monetary policy, while Jiangxi Copper climbed on news of its takeover bid for a Canadian miner. A market rebound stalled Thursday after the government said it was shifting to a "tight" monetary policy from a decade-old "prudent" policy, but investors were concluding this was not a major threat to corporate profits.