Asian stocks had a jittery session Thursday with markets dipping in and out of negative territory as fears of a possible downgrade of U.S. bond insurers hit financials. Both Japan and South Korea finished higher despite a negative start to the session.
The Dow initially rallied after the Federal Reserves 50 basis point interest rate cut Wednesday, but lost momentum in the final hour after CNBC reported that two big bond insurers were facing possible downgrades.
The Nikkei 225 Average finished 1.85 percent higher, buoyed by short-covering in Toyota Motor and other blue-chip exporters, while banks erased nearly all
their losses as subprime fears eased slightly.
South Korea's KOSPI closed 2.2 percent higher, bouncing from the prior day's nine-month closing low, as Hyundai Heavy surged on strong earnings and share buybacks, while Samsung Electronics rose after settling patent disputes. But SK Telecom, South Korea's top mobile carrier, dropped 1.6 percent after it reported a sharper-than-expected 76 percent fall in quarterly profit, dented by marketing costs.
Australia's S&P/ASX 200 Index rose 0.6 percent, led by the big miners, but the index logged its biggest-ever monthly percentage fall after global credit woes took their toll earlier in the month. Takeover target Rio Tinto rose sharply ahead of BHP Billiton's deadline next week to launch a bid.
Hong Kong stocks dropped, reversing opening gains amid a barrage of bad news, ranging from China's ongoing weather-related problems to possible credit downgrades of top U.S. bond insurers. Worries that bad weather would inflict costly damage knocked mainland insurers, while China Life, the country's top life insurer, reeled further after delivering a negative earnings surprise this week. Coal stocks slid as investors sought to lock in profits following their recent rally and after Goldman Sachs downgraded the sector. The Hang Seng closed 0.8 percent lower.
Singapore's FTSE Straits Times Index ended 0.6 percent lower. But shares of Singapore Petroleum rose after the oil refining and marketing firm said its net profit soared to S$117.1 million from S$57.8 million in the same quarter last year, citing high oil refining margins and robust demand for its oil products.
Most Chinese stocks fell because of worry about a U.S. recession, though a jump in heavyweight PetroChina eased declines in the Shanghai Composite Index. Banks, among the companies most vulnerable to an economic slowdown if China is hurt by the weakness of the U.S. economy, continued dropping. Pudong Development Bank led the decline in financials. China's main index closed 0.8 percent down.