Asian stocks steadied on Friday following recent steep losses, with speculation that the Bank of Japan will boost monetary stimulus underpinning sentiment. Investors eagerly awaited budget talks in Washington to see if the two sides would move closer to a compromise over deficit reduction amid speculation the U.S. could fall into recession if no deal is reached.
Japanese shares rallied sharply for a second consecutive session on renewed hopes the Bank of Japan will engage in more aggressive monetary easing. The Nikkei average climbed 2.2 percent following the previous session's 1.9 percent rally, while the broader Topix index jumped 1.9 percent. Trading volume totaled 2.58 billion shares, surpassing the two billion mark for the second consecutive session after recent low participation levels.
Prime Minister Yoshihiko Noda has dissolved the Lower House of Japan's Parliament today, paving the way for a general election in December that will likely end the ruling Democrats' three years in power. Shinzo Abe, the leader of the opposing Liberal Democratic Party and favorite for the win, has already called for "unlimited easing" by the Bank of Japan to lift the nation out of deflation. Also, political analysts expect the LDP to be more assertive in dealing with China.
In stock-specific action, export-oriented stocks outperformed for the second straight day, as the yen steadied after falling to a six-and-a-half month low against the dollar yesterday. Canon and Nikon jumped 6-7 percent, automakers Toyota Motor and Honda Motor climbed 3-5 percent, tech shares like TDK and Advantest soared 5-7 percent on short covering, machinery maker Fanuc rallied 3.8 percent and brokerage Nomura jumped 5 percent. Kirin Holdings lost 2.2 percent on saying it would offer to buy Fraser & Neave's food and beverage business for S$2.7 billion.
China's Shanghai Composite index fell 0.8 percent, extending losses for a fifth consecutive session on policy uncertainty after China's ruling Communist Party unveiled a line-up of broadly older and conservative leadership, disappointing those who had been pressing for reforms to tackle severe challenges like social unrest, environmental degradation and corruption. Hong Kong's Hang Seng index rose 0.2 percent, rebounding from a big loss in the previous session.
Australian shares ended a tad lower, dragged down by banks on uncertainty about the U.S. fiscal cliff and weak European GDP data. The benchmark S&P/ASX 200 hit a seven-week low early in the session before ending down 0.3 percent at 4,337, while the broader All Ordinaries index slipped 0.2 percent. Among the major banks, ANZ, Commonwealth and Westpac fell between 0.7 percent and 1.6 percent, while NAB eased marginally.
In the resource sector, BHP Billiton fell 0.6 percent but Rio Tinto edged up marginally amid signs China's economic growth is bottoming out. Gold miner Newcrest added 1.1 percent as gold prices held steady. Whitehaven Coal retreated 1.8 per cent to a record low after it announced a series of cost cutting measures to offset the decline in global coal prices. Retailer Wesfarmers and blood products maker CSL both rose about half a percent each on defensive buying.
Seoul shares fell notably on renewed foreign selling amid deepening concerns over U.S. fiscal woes and the Eurozone's return to recession for the second time in four years. The benchmark Kospi average slid half a percent. Foreign investors remained net sellers for the seventh straight session, offloading shares worth a net 136.5 billion Korean won over the period, data showed. Heavyweight Samsung Electronics fell 1.8 percent, extending recent declines, while automaker Hyundai Motor added 1.9 percent on bargain hunting. Shares of its affiliate Kia Motors soared 6 percent.
New Zealand shares edged down marginally on concerns about the health of the global economy and violence in the Middle East after Israeli warplanes pounded Gaza. The benchmark NZX-50 index slipped 3 points or 0.08 percent to 3,948. Cavalier led the decliners on the exchange, falling 12 percent after the carpet maker cut its full-year earnings guidance.
Kathmandu Holdings led the gainers, rising 7 percent after the clothing and equipment retailer announced better than expected sales figures for the first quarter. Diligent Board Services, which posted strong revenue growth for the three months to September, ended up 4.7 percent, while shares of cloud accounting software pioneer Xero fell 1.7 percent.
Elsewhere, India's benchmark Sensex was moving up 0.1 percent, Indonesia's Jakarta Composite index added 0.4 percent and Singapore's Straits Times index was little changed, while Malaysia's KLSE Composite and the Taiwan Weighted average edged down about 0.2 percent each.
On Wall Street, stocks extended their recent declines overnight, as Wal-Mart posted disappointing quarterly sales and traders digested a batch of weak economic data on jobless claims and regional manufacturing activity, with readings obscured by major disruptions caused by Hurricane Sandy. The Dow and the tech-heavy Nasdaq slid 0.2 percent and 0.4 percent, respectively, to close at their lowest levels since June, while the S&P 500 edged down 0.2 percent to hit a three-month low.
by RTT Staff Writer
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