Asian markets mostly lower, Tokyo boosted by weak yen

Wednesday, 10 November 2010 22:26 - - {{hitsCtrl.values.hits}}

HONG KONG (AFP) - Asian stocks were mostly lower Wednesday as fears over European sovereign debt weighed on sentiment, but Tokyo outperformed as a strong dollar gave a much-needed boost to Japanese exporters.

Hong Kong slipped 0.90 percent, Sydney shed 0.21 percent and Shanghai was 0.66 percent lower while Singapore lost 0.67 percent.

The losses follow weeks of strong gains built up in anticipation of an economic stimulus announcement by the US Federal Reserve last week.

The central bank’s 600 billion dollar deal last Wednesday sent global markets soaring on hopes that it will kickstart recovery in the world’s biggest economy.

However, with the Fed’s move out of the way traders cashed in profits on lingering eurozone debt woes, while attention has also been turned to the Group of 20 summit set to begin in Seoul on Thursday.

Investors were concerned that “political wrangling will prevent Ireland from implementing the required fiscal austerity measures in 2011”, noted National Australia Bank’s Robert Henderson.

There are also jitters over Greece’s ability to repay its huge debts. The debt issue and profit-taking also sent the Dow lower in New York, with the index closing 0.53 percent off on Tuesday. The European problems put downward pressure on the euro, although it was holding up Wednesday in Tokyo trade.

The single currency fetched 1.3789 dollars in Tokyo morning trade, a tad up from 1.3773 dollars late Tuesday in New York but well down from the 1.42 levels seen last week after the Fed stimulus announcement. It also firmed to 112.52 yen from 112.47 yen.

The dollar slipped to 81.63 yen from 81.72 yen but was well up from the 81 yen mark in Asia Tuesday, lifting Japanese exporters and the Tokyo stock market.

The Nikkei rose 1.17 percent by the break to its highest level since July 14. The Japanese index was also given a boost by a Financial Times report that said financial regulatory guidelines to be proposed by the G20 will focus primarily on large banks with global businesses.

Such a plan effectively means most big banks in Japan would benefit as they have relatively small overseas operations. The dollar’s strength sent oil lower. New York’s main contract, light sweet crude for delivery in December, slipped 25 cents to 86.47 dollars a barrel.

Brent North Sea crude for December delivery fell seven cents to 88.26 dollars. Gold opened at 1,398.00-1,399.00 US dollars an ounce in Hong Kong on Wednesday, down from Tuesday’s finish of 1,412.50-1,413.50.

The precious metal struck a record high 1,424.35 dollars in London trade on Tuesday as dealers looked for a safe haven from volatile currency movements and inflation.