Asia Ends Mixed, Japan Gains but China Sinks

Asian markets eked out some gains Friday. Stocks spent the better part of the session dipping below and above the line. Japan and South Korea pulled ahead at the close, finishing higher, but China and Australia closed weaker.

Worries over the fallout from the U.S. mortgage crisis ebbed after Merrill Lynch's shares rose 4 percent on hopes the world's largest brokerage was closer to seeing improvement from massive subprime-related write-downs.

Financials were mostly weaker following Merrill Lynch's quarter results. Merrill rose 4 percent after the broker posted its third consecutive quarterly loss and said it's cutting 4,000 employees. Chief Executive John Thain said the period was "as difficult a quarter as I've  seen in my 30 years on Wall Street."   

Tokyo's Nikkei 225 Average finished 0.6 percent higher, up for a fourth day, with exporters such as Canon advancing on a softer yen and receding pessimism about U.S. business conditions. Still, caution prevailed in thin trade, as investors moved to
the sidelines ahead of earnings results from Citigroup later in the day and Japanese companies next week.

Seoul stocks closed slightly up, with gains by technology titles such as LG Electronics outweighing declines in financial shares. LG Electronics closed 5.2 percent higher, boosted by the weakening won currency and a solid handset market outlook, dealers said.

Australian shares fell 1.6 percent, as financials such as National Australia Bank fell on caution ahead of earnings from Citigroup, while weaker metals prices hit resource firms.  Also dragging down the market, pallet supplier Brambles posted its worst fall in over five years on worries it could lose business when U.S. retailer Wal-Mart Stores reviews the way it sources pallets.

Hong Kong stocks closed 0.3 percent lower, with investors remaining cautious after mainland shares fell for three consecutive days on fears that high inflation may trigger further macro economic control measures from Beijing. Many investors took to the sidelines ahead of the weekend, as a mixed bag of corporate earnings from the United States failed to provide trading clues.

Singapore's Straits Times Index ended flat. Shares of Chinese backpack maker China Zaino International opened 16 percent lower in its market debut. The firm, which over 3,000 outlets in China, offered shares to investors at S$0.60 each and plans to use most of the S$80.5 million ($59.67 million) proceeds to expand the firm.

China's Shanghai Composite Index tumbled 4 percent to a fresh 12-month low, with PetroChina, the biggest component of the index, sliding below its IPO price for the first time in Shanghai. The index is 50 percent below its peak last October. While many fund
managers say the valuations of some blue chips have dropped to reasonable levels, analysts see no clear support for the index above 3,000 points. Large-cap stocks slid across the board with bank and property shares among the hardest hit. PetroChina plunged more than 5 percent to 16.00 yuan, below its offer price of 16.70 yuan in last year's Shanghai IPO.

© 2008 CNBC.com