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Asian shares lower as economy, eurozone weigh

May 25, 2011

HONG KONG: Asian stock markets lost ground today despite strong performances from automakers in Japan after a report that quake-hit production could return to normal earlier than expected.

Regional markets were following a lead from Wall Street, where tech plays were hit and uninspiring data on home sales left traders gloomy, while eurozone debt concerns are also adding to worries.

Tokyo ended 0.57%, or 54.29%, off at 9,422.88 and Seoul closed 1.26%, or 25.89 points, lower at 2,035.87.

Sydney shed 0.95%, or 44.1 points, to close at 4,584.7.

Shanghai was 0.44% lower in the afternoon and Hong Kong fell 0.55%, with ongoing concerns over a possible slowdown in China’s economy weighing on sentiment.

In Hong Kong Swiss commodities giant Glencore dipped on its debut following an equally uninspiring beginning in London yesterday.

Japanese automakers were doing their best to lift the mood of the markets.

Manufacturers were badly hit by the supply chain ructions caused by the March 11 earthquake and tsunami, but the Nikkei newspaper said swift improvements could see Toyota’s production back to 90% by next month.

Toyota closed up 2.16%, Honda rose 1.32%, Nissan climbed 1.28% and Denso, a major Toyota supplier gained 0.21%.

However, after the market had closed Toyota denied the report, saying there was no change to its goal of 70% by June.

Technology stocks

Overall the Nikkei index was weighed by technology stocks, which were dragged by weakness in their US counterparts.

The problems were compounded for Sony by the disclosure after markets closed yesterday that security at its Greek unit had been breached with 8,500 users affected.

Hideyuki Ishiguro, an equity strategist at Okasan Securities, said the markets may not punish the company too much because the scale of the hack was small compared with the 100 million user accounts affected by earlier attacks on the company’s PlayStation Network and other online entertainment services.

“But Sony’s global image may be damaged further if these attacks continue, even if on smaller scale,” he told Dow Jones Newswires.

In a further setback to the company, Sony Ericsson’s Canadian eShop website was also hit, a company spokesman said Wednesday, adding 2,000 users had been affected.

Investors largely shrugged off official data released shortly before the opening bell showing that Japan plunged into a trade deficit in April as exports tumbled 12.5% year on year due to supply chain problems.

The world’s third largest economy logged a deficit of 463.7 billion yen (US$5.6 billion) in April, reversing a year-before surplus of 729.2 billion yen.

The deficit, however, was smaller than the market average forecast of 700 billion yen.

Brewing crisis

Shanghai and Hong Kong remained concerned over the Chinese economy after data this week suggested manufacturing was slowing, which follows several moves by Beijing to keep a lid on growth and inflation.

“The overall mood in the market is one of concern for the domestic economy. Investors are uncertain about whether Beijing will relax its monetary policy, and this is taking place against a background of a brewing crisis in Europe,” said Soochow Securities analyst Zhu Haomin.

In Hong Kong Glencore fell 2.8% in early trade before paring its losses.

The dual listing, which raised about US$10 billion, is the biggest initial public offering in the world this year and values the firm at about US$60 billion.

Despite the sluggish start, Glencore Chief Executive Ivan Glasenberg said he remained upbeat.

“We are still bullish with commodities and the strength in the commodities market,” he told reporters at the firm’s listing ceremony in Hong Kong.

“At the end of the day, the demand for commodities still continues robustly.”

He rejected suggestions the weak start was tied to a recent dip in commodities prices.

US stocks closed down yesterday as two banks predicted oil prices will rise to US$130 a barrel and data showed the market for new homes remained weak.

The Dow fell 0.20%, the broader S&P 500 gave up 0.08% and the tech-heavy Nasdaq Composite shed 0.46%.

The euro fell against the dollar in Asia, weighed by profit-taking following an overnight gain and amid lingering concerns over Greece’s debt problem. Sentiment has also been hurt by an outlook downgrade for Italy and questions over Spain’s future as it struggles to rein deal with mounting debt troubles.

The euro retreated to US$1.4038 in Tokyo morning trade from 1.4100 in New York overnight. The unit also fell to 114.95 yen from 115.50.

The dollar edged down to 81.88 yen from 81.91.

Investors moved to lock in profits after the euro rose overnight in the wake of German data showing growth broadened with stronger domestic demand in Europe’s biggest economy.

On oil markets New York’s main contract, light sweet crude for July delivery, was down 97 US cents at US$98.62 a barrel, while Brent North Sea crude for the same month dipped US$1 to US$111.53 in the afternoon.

Gold opened in Hong Kong at US$1,523-US$1,524 per ounce, up from yesterday’s close of US$1,519-US$1,520.



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