Bird Flu Fears Hurt China; Nikkei Above 13,000

Markets in Shanghai and Hong Kong pared earlier steep losses on Monday after worries about a new strain of avian flu drove both indices to fresh lows for 2013. Meanwhile, Japan's benchmark Nikkei revisited the 13,000 mark after the yen slid to a four-and-a-half year low against the dollar.

It was a case of the Monday blues for the rest of Asia after a disappointing U.S. March unemployment report. The S&P ASX 200 was steady and Seoul's Kospi closed just 2 points shy from a four-month low.

"At the least, the data will embolden Fed doves who will use the data as evidence that any tapering off in asset purchases should not occur quickly," wrote Darius Kowalczyk of Credit Agricole in a morning note.

ASX 200
CNBC 100

Tokyo Crosses 13,000

News that the Bank of Japan (BOJ) could begin its new stimulus program as early as this week lent support to Tokyo equities. The Nikkei business daily reported over the weekend that the central bank will buy government bonds totaling $77 billion in April.

In response, the yen fell against the greenback to its weakest levels since 2009 at 98.8, off a session low of 97.8.

Analysts are concerned that the recent yen weakness may spark fresh talk of a currency war after angry comments by Korean and Chinese authorities over Japan's export advantage.

"Japanese policymakers are unlikely to give up the pleasures of booming equity markets, political popularity and the concrete hope of economic rebound because neighbors are complaining," said Steven Englander, global head of G-10 forex strategy at Citi in a note.

China Bird Flu Fears

Shanghai-listed stocks reacted to bid flu fears as markets resumed trade after a two-day break. The aviation sector was the worst hit with Air China losing 3 percent and Shanghai International Airport skidding over 4 percent.

The Shanghai Composite and Hang Seng Index earlier touched a fresh year low for 2013 at 2,180 and 21,612 respectively.

"It (bird flu) could be proved a short-lived risk, but for the near term, this incident may affect insurance, airlines, consumer staples, and retailing sectors negatively while healthcare and autos sectors could be potential gainers," wrote analysts of Citi Equity Research in a note.

Meanwhile, airline stocks in Hong Kong rebounded after Friday's sharp sell-off with Cathay Pacific rising over 4 percent.

A sell-off in property shares also weighed on the index after Beijing increased down payments for second homes to 70 percent from the previous 60 percent. Poly Real Estate slipped over 2 percent.

Kospi Struggles

Investors in Seoul were bogged down by rising geopolitical tensions with North Korea after reports surfaced that Pyongyang may be preparing for a fourth nuclear test, leading the benchmark to near Friday's 2013 low of 1,916.

The Korean won reached a fresh nine-month low at 1,138.9 per dollar, lifting blue-chip exporters and capping heavy losses for the benchmark. Samsung Electronics rallied over 1 percent.

The currency has lost nearly 2 percent since last week's high of 1,118.

Australia Lackluster

Resources led the benchmark higher despite falling iron ore prices over the weekend. Mount Gibson Iron led gains by 6.3 percent while the world's top miner BHP Billiton jumped over 1 percent.

Gold miners also rallied after the yellow metal jumped nearly 2 percent on Friday. Silver Lake Resources closed up 5 percent after jumping as much as 7 percent.

The index hit a two-month low on Friday at 4,883 points as the index struggleD to cross the psychologically key 5,000 level.

On Tap This Week:

MONDAY: Federal Reserve Chief Ben Bernanke speaks about the strength of bank stress tests. Investors will be awaiting for comments about the health of lenders and their ability to withstand high interest rates.

U.S. first-quarter earnings season starts in full force, with Alcoa due to report. The aluminum giant's report card is widely seen as an economic bellwether for the rest of U.S corporates.

WEDNESDAY: Minutes of the Federal Reserve's March policy meeting will be closely watched for clues as to when the central bank may begin to wind down its asset purchase program.

THURSDAY: Australian employment figures.