Asian Markets Pull Back from Rally, Yen Slips
Asia stocks were mixed Wednesday despite reassuring comments from Federal Reserve Chairman Ben Bernanke, which sparked a rebound in battered U.S. financial shares. The yen slid further on Japan's mounting economic and political troubles.
Safe-haven government bonds retreated as investors shifted funds into riskier assets, while gold steadied after having soared in the past few weeks on mounting fears about the financial health of countries trying to contain the crisis.
Bernanke said the government did not have plans to nationalize major banks at this stage, remarks that put to ease some worries that the largest U.S. banks may need to be taken over because of huge hits to their balance sheets from the global credit crisis.
Investors showed little reaction to President Barack Obama saying he has identified $2 trillion in coststhat can be cut over the next decade as he seeks to offset big fiscal spending aimed at reviving the economy.
The yen hit a three-month low beyond 97 to the dollar as investors have turned against Japan on the country's deepening recession that is the worst among major economies, forcing hedge funds and other market players to unwind bets favoring the yen. Oil was little changed, trading below $40 a barrel after climbing 4 percent the previous day along with the rebound in equity markets.
Data showed Japanese exports plunged a record 45.7 percent in Januaryfrom the previous year, pointing to another sharp contract in economic activity in the first quarter of the year.
But Japanese shares were helped in part by reports that the government may start directly buying stocks to support the market and ease the strain on the country's big banks, whose large equity portfolios have suffered heavy losses.
The Nikkei 225 Average closed up 2.7 percent as exporters such as Sony climbed after the yen hit a three-month low versus the dollar and on hopes for a possible government stock-buying scheme. Honda surged over 8 percent after an official said the automaker plans to produce more of its new Insight hybrid carsfrom April. Honda has received orders for almost three times its monthly sales target for the gasoline-electric model it launched on Feb. 6 in Japan. Japan's finance minister said on Tuesday the government was
looking into expanding share buying to support the stock market and the Nikkei business daily said this might include buying directly from the market. While market players said the news was positive, they remained wary.
South Korea's KOSPI closed a volatile session 0.3 percent higher, led by KT Corp after it announced a share buyback plan, but losses by shipbuilders and construction issues on deepening economic worries cut the main index's earlier gains.
Australian stocks finished 0.1 percent lower, reversing early gains, as investors looked past an initial bounce on optimism over the health of the financial sector and refocused on a weaker economic outlook.
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Hong Kong shares closed 1.6 percent higher ahead of the index futures expiration on Thursday. But HSBC outperformed after its Wall Street peers rebounded overnight. Hong Kong's dominant fixed-line player PCCW fell after a deferred court hearing cast further uncertainty on its controversial privatization plan. The stock was down after the High Court postponed the first hearing on its $2.2 billion privatization plan to April 1, giving the securities watchdog 21 days to provide evidence in a probe into allegations of vote buying.
Singapore's Straits Times Index was 0.1 percent higher. Sembcorp Marine was up 5.8 percent. The oil rig builder reported a sharp increase in quarterly profit after foreign currency losses almost wiped out profits a year ago.
China's Shanghai Composite Index swung back into positive territory, up 0.3 percent, though investors continued to worry that an uptrend in Chinese stocks may have ended because of high valuations. Shenzhen Development Bank, resumed trade after being suspended since Monday afternoon, sank 4 percent after denying late on Tuesday a local media report that it had been discussing the possibility of a merger with China Development Bank.