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Asian Stocks End Mixed, US Economy in Focus

CNBC.com
Tuesday, 9 Dec 2008 | 5:10 AM ET

Asian stocks were mixed Tuesday. Any gains were kept in check as hopes for big government spending to revive growth were offset by investors shying away from risk in wrapping up a brutal 2008.

U.S. crude oil prices were little changed near $43.80 a barrel after rebounding from a four-year low last week, while safe-haven government bonds dipped slightly. Investors are still debating whether the sharp sell-off this year has run its course or there is worse to come as the global economy slides into a deep recession that has already claimed the three major regions: the United States, Japan and the euro zone.

But the yen's gains showed that investors are still taking advantage of any rebound in higher-yielding currencies to sell, suggesting more market players are looking to close out positions and raise cash holdings before year-end. The yen tends to move in close synch with stocks due to its role in the carry trade, which tends to attract more funds when stocks are rising and market volatility falls.

Japan's Nikkei 225 Average closed 0.8 percent higher, with the yen's advance eating away at gains made by machinery firms such as Komatsu on expectations U.S. stimulus plans will prevent a deepening recession there. Some exporters such as Honda Motor clung to gains despite the yen's rise but others slid, mainly electronics firms. But data showing Japan's economy shrank more than initially estimated in the third quarterhelped put a brake on further gains in the market,.

Seoul shares ended flat after a volatile session that saw them lurch in and out of positive territory, with some techs hit by profit concerns and negative brokerage comments but steel issues gaining. Shares in Samsung Electronics finished 1 percent higher despite the company cutting its sales, capital expenditure and profit targets, reflecting an increasingly tough worldwide economy.

Australian shares fell 0.75 percent, hit by investors cashing out of the top banks to pay for $1.7 billion in new shares in Westpac Banking, though U.S. infrastructure spending plans boosted the miners. Adding to concerns about capital raisings, BlueScope Steel, Australia's biggest steel maker, went on a trading halt pending an announcement on capital management. Investors speculated that would be a capital raising to help it pay down A$400 million in short-term debt due in February.

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Hong Kong shares dropped 1.9 percent, with higher commodity price-fuelled gains in oil and metal stocks offset by a pullback in other blue chips following the previous session's steep rally. But China's largest shipping conglomerate China Cosco surged 12.3 percent after the Baltic Dry Index, which gauges changes in the prices of shipping commodities, broke its three-week losing streak to gain more than 1 percent overnight.

Singapore's Straits Times Index extended gains, up 5.8 percent, led by gains in financials, property and commodity firms after a rally on Wall Street. Top lender DBS Group was up 4.6 percent, while City Developments gained 12.6 percent and Sembcorp Industries rose 6.3 percent.

China's Shanghai Composite Index dropped 2.5 percent in heavy trade, led by property and financial shares, on worries that November economic data, to be released in coming days, would be poor. Fan Gang, an adviser to the central bank, said on Tuesday that Chinese exports may have fallen in November from a year earlier and growth in industrial production could have slowed to about 5 percent.