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Asian stocks mostly shrug off US losses

Tokyo stocks on Monday shrugged off Wall Street weakness, buoyed by a falling yen boosting exporters and comments from Prime Minister Yoshiro Mori that he wanted his party to consider ways to revitalise the stock market.

Korea and Thailand also extended Friday gains, and Manila closed at a seven-month high after an interest rate cut, but in Hong Kong and Sydney the markets lacked drive.

Tokyo's Nikkei index finished up 1.19 per cent at 13,506.23 as it extended its recovery from Thursday's 27-month low on Mori's comments, which included a possible easing of restrictions on corporate share buybacks.

At its high of 13,573.55 the Nikkei was up over 225 points, or about 1.7 per cent.

"Clear signs that the government will not just stand there and let the market slide put a halt to active selling," said Masami Nagano, a fund manager at Sanyo Investment Trust Management.

There was caution amongst analysts, however, as to how beneficial any measures to prop up prices would be in the longer run.

A weekend warning from Asian and European finance ministers that the downside risks for the world economy had increased because of the slowdown in the United States did not unduly worry Asian markets as trading opened for the week.

European markets may also take comfort from German Finance Minister Hans Eichel's comments that European growth could outpace the US economy next year, and that the euro had further room to appreciate against the dollar.

Yen at 17-month lows

While Japanese stocks were boosted by Mori's comments, there was little assistance for the yen as it slipped to 17-month lows against the dollar.

The currency strengthened to a high of 119.37 yen in morning trade, with US bank buying cited, and dealers expect it to hit 120 yen in the near term. The euro also remained strong against the yen, but was contained below Friday's high of 113.20 yen.

"Despite the stocks' rally today, there are still many yen-selling factors and the Japanese government is also showing no concern about the present yen's weakness," said Koichiro Teramoto, forex economist at Tokyo-Mitsubishi Securities Co Ltd.

The weaker yen boosted share prices of major exporters such as Toyota Motor Corp and Sony Corp on Monday.

In the United States a run of positive stock closes came to an end on Friday as both the Nasdaq and the Dow Jones industrial average softened after retail trade data dented the view the Federal Reserve would be rushing to cut rates again.

The Nasdaq finished down 0.53 per cent at 2,626.50, ending a string of three successive stronger daily closes. The Dow Jones underperformed the tech sector again, finishing Friday down 0.79 per cent at 10,525.38.

US markets will be closed on Monday for the Martin Luther King Day holiday.

PCCW weighs in HK

Hong Kong's Hang Seng index dropped around half a percent in Monday morning trade, weighed on by a new low for Internet and telecom group Pacific Century Cyberworks since its takeover of Cable & Wireless HKT last August.

But the Hang Seng recovered ground in the afternoon session and was standing almost unchanged from its Friday close.

PCCW fell nearly nine percent to a low of HK$4.15 in the morning on worries Britain's Cable & Wireless Plc would sell half of its 15.3 per cent holding when a lock-up period ends next month.

Conglomerate Swire Pacific and its airline unit Cathay Pacific added to losses on the benchmark index after Swire warned of possible losses in a key property development and possible lower earnings at Cathay.

Korea extended Friday's 4.64 per cent gains, with the KOSPI briefly touching a three month intra-day high of 608.22, before it closed up 1.89 per cent at 599.00 as profit-taking pared the early momentum from foreign investor buying.

"Profit-taking constantly pushed the key index back below 600 points, a sign that investors remain pressured about the key resistance level," said Park Hyo-jin, an analyst at Shinhan Securities.

Thai shares also extended Friday's rises, with the composite SET index up around 2 per cent in afternoon trade as banks and finance firms continued to benefit from optimism about the incoming government of Thaksin Shinawatra.

The Philippine stock market closed at a seven-month high of 1,567.93, a rise of 1.7 per cent, after the central bank cut its key overnight rates.

While stocks rallied, the peso hit a new all-time low of $0.52.15 to the dollar on worries about president Joseph Estrada's impeachment trial, a slowing economy, and fresh bomb scares in Manila.

Australian stocks pared early gains to end 0.24 per cent higher at 3,250.9, as a broadly weaker market offset a jump of over 7 per cent in heavyweight News Corp.

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