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Asia Wavers, G20 Fails to Instill Confidence

Asian markets wavered Monday as hopes for substantial global financial policy changes faded after a weekend meeting of world leaders failed to produce concrete measures, causing investors to continue to seek safety in U.S. dollars.

Oil prices sank , slipping below $56 a barrel to within striking distance of last week's 22-month low after policymakers from both emerging and developed economies who met in Washington chose to leave individual governments to tend their own backyards. Many are struggling to cope with the worst financial crisis in 80 years, with Japan joining a growing list of economies sliding into recessions.

The yen cut its gains against the euro and the U.S. dollar after a report showed Japan's gross domestic product shrank by 0.1 percent in the July-to-September period and government officials said the situation could worsen further.

Financial markets and economies remained locked in a vicious circle, with weakness in one affecting the other. Investors for their part remained focussed on slashing any form of risk in their portfolios and hoping more interest rate cuts that markets are betting on will eventually improve sentiment.

In Tokyo, the Nikkei 225 Average finished 0.7 percent higher despite data showing the world's second-largest economy has slipped into recession, with buying by public pension funds boosting shares across the board. Investors snapped up so-called defensive shares such as Takeda Pharmaceutical, which are seen as resilient in the face of global economic uncertainty, while Honda Motor rose after business weekly Barron's said it would be a big winner once the turmoil subsides.

South Korea's KOSPI ended lower after a volatile day that swung the main index in and out of positive territory, with banks and builders rising on hopes for construction debt rescheduling, but techs slid on profit worries.

Australian shares fell 2.5 percent to a four-year closing low, with investors disappointed by the efforts of G20 nations to stabilise markets and revive the world economy following a summit meeting at the weekend. Merger activity, in the form of a $4.9 billion bid for soft drinks group Coca-Cola Amatil from Lion Nathan, provided a bit of support, but not near enough to turn the market around.

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Hong Kong shares closed flat after a volatile trading session. Bourse operator Hong Kong Exchanges & Clearing slumped on earnings concerns while Chinese airlines soared on hopes of getting state support. Chinese airlines rallied as their parent companies sought government aid to offset rising costs and weak demand. China's largest carrier by fleet size, China Southern Airlines, surged 10 percent, while China Eastern Airlines gained almost 10 percent at one point. The nation's flag carrier Air China also rose.

Singapore's Straits Times Index fell 0.5 percent. But shares of Singapore Telecommunications gained 4.2 percent after Goldman Sachs upgraded its rating on the stock to "neutral" from "sell". SingTel shares have lost over 20 percent in the past three months on concerns about lower contributions from its overseas units due to a stronger local currency.

China's Shanghai Composite Index rose 2.2 percent on hopes that the government's economic stimulus package would boost infrastructure-related industries. Airlines soared on news that major carriers were seeking government aid.