Asian stocks closed mixed Monday with Japan pushing back into the black right at the end of the Nikkei's trading session. Bank and financial shares weaker and energy-sensitive shares such as airlines falling on the oil rebound. Trading activity was limited before New Year's holiday.
Investors are grappling with a reality of a sharp global slowdown and a huge hit to corporate earnings results next year, but also the prospect of big government spending in 2009 to revive growth. Many portfolio managers remain cautious even as this year's sell-off that has halved the value of Asian stocks, awaiting more clarity on just how severe the blow to companies is going to be.
The South Korean won struck a two-month peak as a slow recovery in investor appetite for risk boosted some Asian currencies, while oil and gold prices surged on the flare-up of violence in the Middle East.
The U.S. dollar took a hit from the jump in oil and gold prices as the conflict
between Israel and Hamas in the Gaza Strip stirred worries about energy supply disruptions and prompted a shift of funds into traditional safe-havens.
The dollar edged slightly higher against the yen after disappointing data from Japan, while it fell against the euro amid a grim outlook for the U.S. economy and as trading thinned out before the year end. Oil futures were trading above $39 a barrel.
The Nikkei 225 Average edged up 0.1 percent, with non-life insurers such as Mitsui Sumitomo Insurance gaining on news it is in talks to merge with two other firms.
Oil and gas field developer Inpex Holdings and other oil-related firms gained on a surge in crude oil, with hopes that economic policies expected to be enacted next year will help prevent a worsening of the global economy also boosting some shares. The Tokyo bourse will end the year with a half day of trading on Tuesday and reopen on Jan. 5.
South Korea's KOSPI ended flat, nearly erasing earlier 3 percent losses on buying from pension and state funds looking to lift the market before the year's closing, with Hyundai Motor jumping 3.95 percent. LG Electronics rose 3.3 percent but Hynix Semiconductor dropped 4.18 percent.
Australian shares finished 1.1 percent higher as investors chased high dividend yielding banking
stocks, while retailers gained on expectations of strong post-Christmas sales. But trade was light with many investors away on year-end holidays, exaggerating price moves, making it difficult to judge the medium- to long-term trend in the market
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Hong Kong shares ended 1 percent up, rebounding from early losses as higher commodity prices lifted resources stocks, but financial stocks weighed down the broad market on looming concerns over banks' earnings. Some local property counters also pulled back, limiting gains on the main index, on news of poor apartment sales over the holiday weekend.
Offshore oil producer CNOOC jumped 3.2 percent after crude prices moved close to $40 per barrel in Asian trade on fears of supply disruptions after violence flared between Israel and Hamas. Gold miner Zijin Mining shot up 5.5 percent, tracking strong gains in the price of the precious metal, which rose to an 11-week high on Monday.
Singapore's Straits Times Index rose 3 percent in quiet trade as decent gains for selected blue chips buoyed the index. Best blue chip performers include ST Engineering, Wilmar and,
CapitaLand.
China's Shanghai Composite Index closed nearly flat after dropping for a sixth straight day because of concern about the economic slowdown, with coal shares among the biggest losers after coal miners failed to agree with power producers on next year's annual supply contracts. Shenhua Energy, the biggest coal producer, sank 3.50 percent.
Power generators were strong, with Huaneng Power up 2.8. Steel shares were soft. Baoshan Iron & Steel dropped 3 percent . The China Securities Journal reported that the steel industry suffered a combined loss of 12.77 billion yuan in November, according to sources at the country's steel association.