Tuesday 6 October 2009

Asian Shares End Up; RBA First G-20 Ctrl Bank To Hike Rates

Tue, Oct 6 2009, 10:07 GMT

Asian Shares End Up; RBA First G-20 Ctrl Bank To Hike Rates

SINGAPORE (Dow Jones)--Asian equity markets overcame another choppy session Tuesday to end mostly higher, with Australian stocks snapping a four-session losing streak despite a surprise rate increase by the central bank.

The S&P/ASX 200 ended 0.4% higher at 4591.60, well off the day's high, after the Reserve Bank of Australia became the first central bank in the Group of 20 nations to begin withdrawing monetary stimulus, by raising its key policy rate by a quarter point to 3.25%.

"I think it's good news if they're increasing rates because it shows growth is coming through domestically but the market, in its fragile state at the moment, would probably see that as a negative," said Justin Gallagher, head of Sydney sales trading at RBS.

Elsewhere, Japan's Nikkei 225 Average climbed 0.2% to 9691.80 after flirting with losses, South Korea's Kospi slipped 0.5%, New Zealand's NZX 50 gained 0.4% and Taiwan's Taiex advanced 1.3%.

Hong Kong's Hang Seng Index rallied 1.9%, while India's Sensex rose 0.5% and Singapore's Straits Times Index gained 1.1%.

U.S. stocks were pointing toward a higher opening, with Dow Jones Industrial Average futures recently up 64 points in screen trade. The DJIA rose more than 110 points overnight after falling in the previous four sessions.

Most Australian banking plays traded off early highs after the RBA rate decision. Commonwealth Bank of Australia ended down 0.4% and National Australia Bank fell 0.4%, while Australia & New Zealand Banking Group finished up 0.9%.

The Australian dollar surged to $0.8875 from about $0.8770 after the RBA decision. The New Zealand dollar also rose, climbing as high as $0.7362, from $0.7309 earlier. Among other major currencies, the euro was recently at $1.4734 from $1.4651 in late New York trade on Monday, and at 131.24 yen from 131.19 yen. The U.S. dollar was at 89.06 yen from 89.54 yen.

Asian currencies were also broadly higher against the U.S. dollar, with suspected central bank intervention to support the greenback from South Korea, Taiwan and Thailand authorities.

In Tokyo, Mazda Motor jumped 7.6% after its shares tumbled for seven sessions. Investors also cheered news from Monday that the company expected a lower net loss for the fiscal year than it had originally forecast. The company also announced plans to raise about $1 billion, partly to develop technologies that will improve the fuel-efficiency of its cars.

Other exporters also staged a rebound after heavy losses recently, despite the yen's continued strength against major currencies. Panasonic rose 1.3% and Nikon rose 3.7%.

Gains in Indian stocks were limited by mobile operators' steep falls on concerns about intensified price wars, after Reliance Communications Monday announced a low-tariff plan that effectively allows subscribers to make local and domestic long-distance calls for 0.5 rupees (one cent) a minute. Reliance Communications plunged 10.7%, its bigger rival Bharti Airtel skidded 10.7% and Idea Cellular sank 8.0% in heavy trading volumes.

"The strategic reason for (Reliance's) move is clear - to make it uneconomical for new (telecom companies) to operate in the Indian market. We believe that this is a positive move from a medium-term view despite its near-term impact on revenue/earnings per share," J.P. Morgan analysts wrote in a note.

Korean shares declined for a fourth straight session, reversing early gains after the Australian central bank's rate increase on concerns that the Bank of Korea may follow suit to contain rising inflationary pressures and prevent asset bubbles in an environment of low interest rates.

Shares of Samsung Electronics fell 0.3%, although the company said it now expects stronger third-quarter sales of 36 trillion won.

In Hong Kong, shares of China Resources Cement ended flat on their trading debut at their initial public offering price of 3.90 Hong Kong dollars (50 U.S. cents), after opening at HK$3.75. The performance, which comes after a string of weak listings in recent weeks in Hong Kong, was unlikely to lift investor sentiment toward coming IPOs, said analysts.

Financial stocks in South Korea were weak, with Shinhan Financial Group dropping 0.7% and Woori Financial dropping 3%, while Hana Financial Group slipped a further 0.1%. Hana shares had plunged 14.4% Monday following a report it planned a share sale to boost capital.

But financial shares were higher in some other markets after Goldman Sachs upgraded its view on large U.S. banks to "attractive" from "neutral" ahead of quarterly earnings. Japan's Nomura Holdings added 4.4% and Mizuho Financial Group climbed 2.8%. In Singapore, DBS Group Holdings rose 1.8% and in Hong Kong, Bank of China added 2.7% and HSBC Holdings gained 1.2%, while HDFC Bank shares were up 1.8% in Mumbai afternoon trading.

Strength in commodities prices helped regional resource plays. Australia's BHP Billiton gained 0.9% and Rio Tinto added 1.6%, while Newcrest Mining rose 2.4%. In Tokyo, Sumitomo Metal Mining surged 6.1% and in Hong Kong, Jiangxi Copper gained 4.1% and Zijin Mining Group jumped 6.3%.

Japanese government bonds advanced after a stronger-than-expected auction of 10-year JGBs. The result suggested that demand for long-term bonds was very firm, said Mizuho Securities market analyst Masashi Shimominami. "Many investors expect long-term yields to extend their declines as the economic outlook remains gloomy, and they are eager to buy JGBs in a liquidity-driven market."

The lead December JGB futures contract rose 0.09 to 139.59 points. The 10-year cash JGB yield fell 2 basis points to 1.24%.

The November Nymex crude oil futures contract was up 93 cents at $70.34 per barrel. Spot gold was at $1,023.10 per troy ounce, up $5.90 from the New York close.

-Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com

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(END) Dow Jones Newswires

October 06, 2009 06:07 ET (10:07 GMT)

Copyright 2009 Dow Jones & Company, Inc.

UPDATE: Hungary's Aug Output Keeps Falling On Drop In Cars

Tue, Oct 6 2009, 10:18 GMT

UPDATE: Hungary's Aug Output Keeps Falling On Drop In Cars

(Adds comments from statistician, analysts.)

By Margit Feher

BUDAPEST (Dow Jones)--Hungary's industrial output failed to recover in August despite expectations of some improvement, firming the market view that the central bank will continue to cut interest rates to boost the economy.

Industrial output fell 0.7% in August from the previous month and was down 19.9% on the year, following a 0.7% monthly fall and a 19.4% annual decline in July, the Central Statistics Office, or KSH, said Tuesday.

"The data confirmed that the economy remains very weak, with August preliminary industrial output worse than consensus, showing close to a 20% contraction. There is no doubt that the central bank will deliver further rate cuts," said BNP Paribas in a note.

Output remained in August at a depressed level due, to a large extent, to a fall in car manufacturing.

"The trends of the past months continued; output has been stagnating at about 80% of the previous year's level as all sectors of industry and both exports and domestic sales are depressed. Car manufacturing, which has a large weight in the overall numbers, accounted for 40% of the decline, as in previous months," KSH statistician Miklos Schiendele told reporters.

Output fell in the first eight months of the year by 21.8% from a year earlier.

"Hungarian industry doesn't seem to be able to follow the rebounding confidence indicators, PMI and the regional recovery due to the sharp collapse in domestic demand, which prolongs the recession," said economist Gergely Suppan at Takarekbank.

There could be a rise in the monthly reading in October, but that would be misleading as the rise would come against a very low base a year earlier, KSH statistician Schiendele said. Hungarian industrial output started to decline sharply from October 2008 onwards, when the country was hit hard by the global economic crisis. As a result, the full-year decline could be somewhat less than the fall recorded for the January-August period, the statistician added.

As about 80% of the country's exports go western Europe, Hungary's output is consistent with the sluggish recovery expected in the euro zone, MKB economist Zsolt Kondrat said.

"We expect a very slow and gradual pickup in domestic industrial activity, 1.5% quarterly growth [both] this quarter and the last quarter [of 2009] and a roughly 18% drop for the whole year. However, due to a very strong base effect, even this would bring positive growth figures from December," Kondrat added.

The monthly reading is adjusted seasonally as well as for the number of working days. The annual number is adjusted for the number of working days. Output also fell 19.9% under unadjusted data in August versus a year earlier.

Statistics office Web site: www.ksh.hu

-By Margit Feher, Dow Jones Newswires; +36-20-925-2364; margit.feher@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ayP1X7kVnr7MWhQ1SnmXpA%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

October 06, 2009 06:18 ET (10:18 GMT)

Copyright 2009 Dow Jones & Company, Inc.

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