Asia Markets

Asia markets end mostly higher; Sharp drops 11% as takeover deal in question

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Asian markets closed mostly higher Friday, with Japan extending gains, but some caution persisted after recent volatility.

Stephen Innes, a senior trader for Asia Pacific at OANDA was, doubtful the relatively sanguine market sentiment would persist.

"Despite this glimmer of optimism that we are seeing leading up to this weekend's G-20 summit, the likelihood of a coordinated policy pact is doubtful. Instead, the big fear is that whatever sliver of optimism investors currently have in an otherwise dreary outlook will be further eroded after the summit. So we could be in for some messy markets next week," he said.

G20 finance ministers and central bankers were gathering in Shanghai for a summit that kicked off Friday to discuss global economic growth concerns.

In Japan, the benchmark ended up 0.30 percent, or 48.07 points, at 16,188.41, retracing gains of as much as 2.06 percent earlier in the session. The index had tacked on 1.41 percent in Thursday's session. The broader Topix closed up 0.29 percent, or 3.73 points, at 1311.27.

Shares initially got a boost as the yen weakened, with the dollar-yen pair strengthening above the 113-handle, but the yen gave up some of its gains during the session. The dollar was fetching 112.69 yen at 14:40 SIN/HK. A weaker yen is a positive for shares of Japan's exporters as it boost overseas earnings when they are translated back into the home currency.

Exporters were mixed, with Toyota down 0.35 percent, while Sony added 0.17 percent.

Troubled Japanese electronics maker Sharp saw steep losses, with its shares down 11.41 percent; on Thursday, its shares fell 14 percent. The sell-off started after Reuters and the Nikkei reported Thursday that the company accepted a 659 billion yen ($5.9 billion) takeover bid by Taiwan's Foxconn. Since then, several media outlets reported the Taiwanese manufacturer as saying that it would not sign the deal until Sharp clarified terms in a new document over previously undisclosed contingent liabilities potentially worth more than $3 billion.

Shares of Foxconn, also known as Hon Hai Precision Industry, were down 1.66 percent.

Among other markets, Chinese markets were also higher, with the up 0.95 percent, or 25.96 points, at 2767.21, retracing some of its 6.4 percent plunge in the previous session. But the Shenzhen composite closed down 0.12 percent, or 2.13 point, at 1736.54. Hong Kong's Hang Seng Index tacked on 2.52 percent, or 475.40 points, to close at 19,364.15.

In South Korea, the Kospi ended up 0.08 percent, or 1.59 points, at 1920.16.

Bucking the trend, Australia's S&P/ASX 200 closed nearly flat at 4,879.96, down just 1.22 points, with the energy and mining sectors down 0.93 and 0.77 percent, respectively. Miners finished mostly lower, with Rio Tinto, BHP Billiton and Fortescue down between 2.56 and 3.19 percent.

Energy remained a focus for the markets. Oil prices retreated during Asian hours, with the U.S. West Texas Intermediate (WTI) crude down 0.21 percent at $33.00 at 14:50 SIN/HK time, after settling up 2.86 percent overnight. Global benchmark Brent futures were down 0.48 percent at $35.12 a barrel, following gains of 2.6 percent in U.S. hours.

David de Garis, a director and senior economist for fixed income, currencies and commodities at the National Australia Bank, wrote in a morning note that oil's overnight gains were "on seemingly little fundamental news."

Overnight, OPEC members and Russia reportedly confirmed a meeting in March to discuss capping crude production at January levels. Earlier in the week, Saudi Arabia dashed hopes of oil production cuts to reduce the global supply glut. But analysts are skeptical that a freeze, without output cuts, will have much impact.

Energy shares were mixed. In Japan, Inpex added 0.14 percent, but in Australia, Woodside dropped 3.06 percent and Oil Search fell 0.75 percent. Hong Kong-listed Sinopec gained 5.73 percent,

In Singapore, Noble Group shares were up 5.97 percent after falling over 10 percent in total on Wednesday and Thursday, following the company's profit warning after the market close Tuesday. The commodities trader reported its first annual loss in nearly twenty years after the market close Thursday, saying it lost $1.67 billion after a $1.2 billion writedown on its coal assets.

After the profit warning, ratings agency Moody's downgraded Noble to Ba3 from Ba1 in the junk category. The agency had cut Noble's investment grade rating in December.

One of Australia's largest supermarket chains, Woolworths, retraced losses of as much as 2.7 percent to finish up 2.06 percent. The company reported its earnings before market open. Reports said the company's fiscal first-half net income fell 33 percent, while first-half profit after tax was A$925.8 million, down from the $1.3 billion reported a year earlier.

Japan inflation data, released Friday, spurred some fresh concerns about the country's efforts to kickstart its economy. Japan's core consumer prices for January remained unchanged on-year, in line with expectations, and below the Bank of Japan's inflation target of 2 percent. Last month, the central bank introduced negative interest rates in a bid to spur economic growth.

"Today's Japanese CPI release underscores the need for further action by the BOJ if they are determined about the 2 percent inflation target," Angus Nicholson, a market analyst at IG, wrote in an afternoon note, adding while energy prices were primarily responsible, the number also underscored lack of inflationary pressure in other parts of the economy.

"An increase in the BOJ's asset purchases program seems to be what the market is demanding. But the BOJ's QQE [Qualitative and Quantitative Easing] policy is at such extreme levels that they are beginning to run out of government bonds to buy," added Nicholson.

Stateside, the closed up 1.29 percent, the S&P 500 gained 1.13 percent and the added 0.87 percent.

Companies expected to announce earnings include Nine Entertainment, AirAsia and Sun.

— Reuters contributed to this report.

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