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Asia Stocks End Mostly Lower on Debt Worries

CNBC with Wires
Wednesday, 12 May 2010 | 7:33 AM ET

Asian stocks ended mostly lower on Wednesday after the negative lead on Wall Street, as persistent worries about the eurozone's fiscal health continued to dampen market atmosphere.

Japan's Nikkei averageslipped 0.2 percent, erasing earlier gains as concern about the euro zone's debt woes continued to weigh on market confidence even after a $1 trillion European rescue package.

Construction machinery maker Komatsu and other companies that depend on Chinese demand fell on a combination of worries about Chinese monetary tightening and weakness in Shanghai shares .

China's consumer price inflation pushed up to an 18-month high of 2.8 percent in April from a year earlier.

Machinery maker Komatsu fell 1 percent to 1,716 yen and shipper Kawasaki Kisen slid 2.7 percent to 359 yen. Hitachi Construction lost 2.2 percent to 1,845 yen.

The benchmark Nikkei eked out small gains earlier in the day, helped by a forecast-beating quarterly profit from Toyota Motor and an upbeat growth forecast from electronics
conglomerate Hitachi. Toyota's shares rose 2.7 percent to 3,590 yen while Hitachi advanced 4.7 percent to 400 yen.

The benchmark Nikkei closed down 17.07 points at 10,394.03, after rising nearly 1 percent at one stage. The broader Topix was almost unchanged at 932.83.

After the market close, Nissan Motor, Japan's No.3 automaker, forecast a 12 percent rise in operating profit this year as it prepares an aggressive drive into emerging markets such as India with a new global compact car. Before the news, the stock ended the day up 1.1 percent at 745 yen.

Seoul shares ended 0.4 percent lower, amid persistent eurozone worries and concerns about Chinese monetary tightening, while Samsung Life Insurance ended firm on its debut.

Market reaction to the Bank of Korea's decision to leave its interest rate at record-low 2.0 percent for a 15th consecutive month was muted.

The Korea Composite Stock Price Index (KOSPI) finished down 0.43 percent at 1,663.03 points.

Samsung Life, the most actively traded share on the KOSPI, ended its first trading day at 114,000 won per share, up 3.6 percent from the initial public offering price of 110,000 won after posting gains of as much as 10 percent.

Shares in LG Innotek, Seoul Semiconductor and SK C&C outperformed after global index compiler MSCI said the companies would be added to its Global Standard Indices from May 26.

LG Innotek ended flat, while Seoul Semiconductor rose 4.4 percent and SK C&C climbed 3.86 percent.

Airlines rallied on high hopes for May earnings. Korean Air Line soared5.01 percent and Asiana Airlines advanced 4.96 percent.

Australian shares rose 0.6 percent, recovering some of the prior day's losses as upbeat budget forecasts supported prospects of further business investment and consumer spending.

But the banking sector gave up much of its early gains, bringing the market off its highs, after a report on the Sydney Morning Herald's web site that banks were facing a potential class action lawsuit to recover A$400 million for allegedly overcharging on penalty and late fees.

Gold miners were the brightest spot in the market after gold prices reached a fresh record, with Newcrest up 3.9 percent at A$32.62 on double average daily volume.

The benchmark S&P/ASX 200 index rose 25.1 points to 4,573.1, after touching a high of 4,612.8. Stocks opened stronger across the board, with banks helped by changes unveiled in the budget that will make bank deposits more attractive by reducing tax paid on interest.

New Zealand's benchmark NZX 50 index ended down 10.9 points at 3,156.1.

Among the top banks, ANZ halved its earlier gains to end up 1.0 percent at A$22.74, while Westpac gained 0.2 percent to A$24.86.

Commonwealth Bank of Australia, the nation's top home lender, dropped 1.0 percent to A$54.30. It said its quarterly cash profit rose 30 percent, missing analysts' views as
bad debt charges fell less than expected, and gave a muted outlook.

China's key stock index closed up 0.3 percent, bouncing from a fresh one-year low as banks and property companies managed a technical rebound although renewed policy tightening concerns and worries over Europe's debt crisis weighed on sentiment.

The Shanghai Composite Index ended the day at 2,655.7 after twice dipping near the key psychological level at 2,600 points.

Shanghai's property subindex outperformed the wider market, up 2.0 percent despite a news report that Shanghai was preparing tough new draft measures to rein in the property market that would include tax steps.

ICBC, the day's most active stock, rose 2.9 percent, while Minsheng Bank, the second most active, and Merchants Bank each gained 2.4 percent.

Hong Kong's Hang Seng index was flat at 20,158.86 points in late afternoon trade.

Electronics retailer GOME declined 3 percent after its board said it had re-appointed three members of Bain Capital to the board.

China's largest chip-maker SMIC fell 2.7 percent, despite posting strong quarterly results. Analysts expect the company to continue to report operating losses through to the end of the year, but to return to an operating profit by the third quarter of 2011, according to five polled by Thomson Reuters I/B/E/S.