Asian stocks turned in a mixed performance on Thursday after the informal EU summit ended with no concrete plans to address the region's debt crisis and a preliminary reading for a purchasing managers' index indicated China's manufacturing sector shrank for a seventh straight month in May, reflecting the deteriorating export situation.
Gains lacked conviction as European leaders failed to produce a breakthrough in the eurozone crisis, with divisions further widening over proposals such as the creation of common Eurobonds.
The euro extended losses to hit a near two-year low against the dollar after data showed German business confidence fell more than economists forecast in May and the British economy shrank more than initially estimated in the first quarter due to weaker construction output.
Japanese shares finished marginally higher, with the Nikkei average edging up 0.1 percent, as a brief fall in the benchmark index below 8,500 for the first time in four months spurred some bargain hunting in heavyweights like Fanuc and real estate developer Mitsui Fudosan. The broader Topix index also added 0.1 percent. Export-related shares, especially those with exposure to the euro zone, traded weak amid the falling euro. Canon lost 2.2 percent and TDK dropped 2 percent.
Meanwhile, Bank of Japan Governor Masaaki Shirakawa said today that the central bank will continue efforts to beat deflation with powerful monetary easing, but ruled out easing monetary policy to influence local currency movements.
China's Shanghai Composite index fell half a percent, extending declines for a second consecutive session on concerns over the slowing domestic economy. Hong Kong's Hang Seng index ended down 0.6 percent.
Preliminary findings of a survey by Markit Economics showed that China's manufacturing sector shrank for a seventh straight month in May owing to weak demand and the deepening eurozone crisis. The headline HSBC purchasing managers' index that measures the performance of the factory sector fell to 48.7 in May from 49.3 in April, with a PMI reading below 50 suggesting contraction.
Australian shares failed to sustain early gains after a private survey showed the Chinese economy is struggling to regain momentum. The benchmark S&P/ASX 200 eased 0.2 percent and the broader All Ordinaries index shed 0.3 percent.
The big four banks fell between 0.2 percent and 0.9 percent. Mining giants BHP Billiton and Rio Tinto edged up modestly, but smaller rival Fortescue lost 1.8 percent. Sundance Resources jumped 3.8 percent after the iron ore group signed a revised agreement with China's Sichuan Hanlong Group to alter a $1.65 billion takeover agreement.
Energy shares ended mixed, with Oil Search easing 0.4 percent and Santos retreating 1.3 percent, while Woodside added 0.7 percent. Shares of AGL Energy were placed in a trading halt after announcing a $875 million share sale. Aquarius Platinum slumped 6.6 percent after a loss of production at its Mimosa mine in Zimbabwe due to a fire.
South Korea's Kospi average rose 0.3 percent in thin trading, with builders leading the gainers on bagging new orders, though the broader market remained sluggish on reports of divisions among European leaders over how best to tackle Europe's fiscal woes. Daelim Industrial rose 1.7 percent after it won a $776 million project in consortium with Japanese trading house Sojitz Corp to build a coal power plant in Vietnam.
New Zealand shares fell, with the benchmark NZX-50 index easing 0.4 percent, after the government unveiled a budget aimed at returning to fiscal surplus in 2014/15. The fiscal surplus for the year ending June 2015 is seen at NZ$197 million and forecast to grow to NZ$2.1 billion and NZ$4.4 billion in 2015/16 and 2016/17, respectively. "These surpluses will allow the government to rebuild New Zealand's resilience to further shocks, help lift national savings, keep interest rates lower for longer, take pressure off the exchange rate, and reduce future finance costs," Finance Minister Bill English said.
Outdoor clothing and equipment company Kathmandu Holdings paced the declines on the exchange, falling 3.8 percent, while Rakon, Fletcher Building and Nuplex lost 2-3 percent. Whiteware manufacturer Fisher & Paykel Appliances rose 2.8 percent after the company beat its full-year guidance while posting a 45 percent drop in full-year profit. Guinness Peat Group gained 2.1 percent after Sir Ron Brierley retained his seat on the board of the investment company in a shareholder vote.
India's benchmark Sensex was last trading up 1.5 percent, as a steep hike in petrol prices fueled speculation that the government may hike diesel and LPG prices on Friday to cut the fuel subsidy bill and counter the perception of government inaction that has lowered the credibility of the UPA government among overseas investors.
Elsewhere, Indonesia's Jakarta Composite index and Singapore's Straits Times were little changed and Malaysia's KLSE Composite was up 0.6 percent, but the Taiwan Weighed average eased 0.3 percent.
On Wall Street, stocks staged a late-day recovery overnight, with data showing a bigger than expected increase in U.S. home sales in April and reports that the European Union was considering a bank deposit guarantee scheme offering some support. The tech-heavy Nasdaq rose 0.4 percent and the S&P 500 added 0.2 percent, but the Dow slipped 0.1 percent.
by RTT Staff Writer
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