Asia Markets Edge Higher, Caution Lingers

Asian markets edged higher Thursday as recent selling pressure eased and the safe-haven bid for the dollar and gold retreated, but reminders of the global economic gloom and financial sector woes kept investors cautious.

Weak U.S. housing and industrial output data, along with the concerns that worsening economies in central and eastern Europe could put more pressure on European banks, is raising the prospects of more weakness in global markets.

The dollar -- which tends to benefit from safe-haven bids -- slipped against the yen . The yen was under pressure due to worries about the contracting Japanese economy and political uncertainty as voter support for Prime Minister Taro Aso sinks. Crude oil prices rose to trade above $37 a barrel.

Japan's Nikkei 225 Average  closed 0.3 percent higher, a day after closing at its lowest point in nearly four months, as blue-chip exporters gained on the dollar's first move above 93 yen in six weeks. The market largely brushed aside news from the Bank of Japan, which said it would extend the deadline for its buying of commercial paper to support corporate funding. It kept its key policy rate unchanged at 0.10 percent by a unanimous decision.

South Korea's KOSPI fell, weighed down by persistent economic worries that sent exporters including Hynix Semiconductor lower, while some banks turned down despite government corporate restructuring plans. Australian shares rose 1.1 percent, led by bank stocks such as Westpac Banking as investors bet their limited exposure to overseas markets would shield them from the global financial meltdown.

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Hong Kong shares fell 0.5 percent in fading turnover as investors were sidelined amid the bleak global econoic outlook, but China's power producers bucked the downtrend lifted by lower coal prices. Huaneng Power moved up 5.4 percent while Datang International Power gained 4.4 percent. Europe's biggest bank HSBC fell another 1.2 percent, hovering above the 10-year low it hit in January.

Singapore's Straits Times Index was down 1.2 percent as investors offloaded shares after yesterday's bounce. Water treatment firm Hyflux rose as much as 6.6 percent after posting a near-80 percent jump in annual net profit, but some analysts cut their price targets, citing concern over a weak industrial sector.

China's Shanghai Composite Index rose as news on industry aid lifted steel and electronics shares although turnover shrank, suggesting that investors remained cautious and flows of fresh money into the market were drying up.  Baoshan Iron & Steel advanced 4 percent after
sinking 5.59 percent on Wednesday.

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