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Cyprus Worries Keep Asian Stocks Mixed

Asian stocks turned in a mixed performance on Wednesday as investors digested news of Cyprus' rejection of a bank deposit levy in return for receiving a 10 billion euros bailout and awaited the outcome of the Federal Reserve's two-day monetary policy meeting later in the day.

The controversial plan to impose up to 10 percent tax on citizens' savings met with widespread protests in Cyprus, threatening a full-scale run on local banks and increasing fears of a contagion. Sensing the danger, the Cypriot parliament overwhelmingly rejected the tax on deposits, throwing the bailout plan into disarray. Politicians in Cyprus are continuing emergency talks in a bid to find a way to come up with billions of euros, a condition cast by the 17-nation currency bloc.

Cypriot banks are closed until at least Thursday in an attempt to prevent a bank run. "We are hoping for a good outcome" media reports quoted Cyprus Finance Minister Michalis Sarris as saying as he waited to present a plan to senior Russian officials in Moscow to secure financial aid and avert a financial-sector meltdown.

Investors now eagerly await the Federal Reserve's policy statement due later in the day to see if the central bank will maintain its pledge to stimulate the economy amid continuing uncertainty in Cyprus and signs of improvement in the U.S. economy.

Chinese shares rallied, with the benchmark Shanghai Composite index climbing 2.7 percent to post its biggest gain since January 14, as investors went bargain hunting in banks and property developers following recent losses. Hong Kong's Hang Seng index added a percent.

Australian shares eased, with hopes that the Fed will not end stimulus helping limit the downside to some extent. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended down about 0.4 percent each. Miners tumbled amid swiftly falling iron ore prices as Goldman Sachs cut its forecast for iron ore prices for 2013 to $139 per ton from $144 per ton, citing excess supply and decreasing demand from China. It lowered its forecast to $80 a ton for 2015. BHP Billiton fell 2.7 percent, Rio Tinto lost 2 percent and smaller rival Fortescue Metals Group retreated 2.3 percent.

Among the major banks, ANZ and Commonwealth ended unchanged and NAB eased 0.2 percent, but Westpac rose 0.3 percent. Retailer David Jones soared 4 percent despite posting a 14 percent slide in first-half profit amid tough trading conditions. Wesfarmers edged up marginally and Woolworths rose 0.4 percent. In the energy sector, Woodside Petroleum, Oil Search and Santos all ended less than a percent each.

South Korea's Kospi average lost a percent to end at a one-month low on continued selling by foreign investors. Also, investors reacted to reports of network outages at some TV networks and a large bank. Tech shares bore the brunt of the selling, with Samsung and LG Display closing down 1 percent and 4 percent, respectively.

New Zealand shares rose after the Cypriot parliament voted against the controversial levy on bank deposits. The benchmark NZX-50 index advanced 0.1 percent. Cloud accounting software firm Xero soared 8 percent to a record high. Rural services firm PGG Wrightson climbed 5.6 percent as prices at Fonterra's latest online dairy auction reached record highs.

Pay-TV operator Sky Network Television jumped 1.5 percent to a two-year high, national carrier Air New Zealand rallied 2.8 percent, logistics firm Mainfreight rose 1.8 percent and clothing retailer Hallenstein Glasson Holding edged up 1.3 percent, while heavyweights Fletcher Building and Telecom fell 0.6 percent and 1.1 percent, respectively.

Elsewhere, the Japanese market was closed for a public holiday. India's benchmark Sensex was down 0.6 percent on continued political uncertainty despite Finance Minister P Chidambaram dismissing reports of threat to the government following the DMK's withdrawal from the ruling UPA coalition.
Despite the adverse political developments, there will be no letup in the efforts to continue with the economic reforms, he said.

Indonesia's Jakarta Composite index was up 0.2 percent and Malaysia's KLSE Composite index rose 0.4 percent, while Singapore's Straits Times index and the Taiwan Weighted average were down about half a percent each.

U.S. stocks fluctuated before ending on a flat note overnight, as traders weighed concerns about the situation in Cyprus against upbeat U.S. housing data. The Dow edged up marginally, while the S&P 500 and the tech-heavy Nasdaq slipped 0.2 percent and 0.3 percent, respectively.

by RTTNews Staff Writer

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