Japan Leads Asia Advance

Ivaylo
08 Aug, 2006
New York City

Japan dropped more than 2% Monday on concerns over rising oil prices and uncertainty about the direction of U.S. interest rates.But markets have already discounted the oil price and even $80 a barrel would be tolerable to the region. Japanese stocks also got a boost from government data released Tuesday showing that bank lending grew at the fastest rate in at least five years. Hong Kong also gained as telecom, property and energy shares all put in a strong showing.

[R]7:30AM Japanese stocks soared, leading the entire region higher.[/R]
Asian markets finished higher on Tuesday. The Nikkei 225 Average gained 2.05% to close at 15,464.66 as exporters such as Toyota and Fujitsu led the gainers. Toyota Motor gained 2.65% and Honda Motor added 2.67%. Electronics maker Fujitsu Ltd advanced 2.33%. Oil explorer Inpex Holdings jumped 2.73% and refiner, Nippon Oil Corp, rose 1.96%.

Hong Kong''s Hang Seng Index gained 0.56% to finish the day at 17,048.20 as telecom, property and energy shares all put in a strong showing. China Mobile, Henderson Land and and CNOOC Ltd. were among the advancing stocks.

China''s Shanghai Composite gained 2.1%, South Korea''s Kospi Index advanced 1.67% and Australia''s S&P/ASX 200 index added 1.27%, with miners BHP Billiton and Rio Tinto climbing in spite of a strike in a key Chilean copper mine jointly owned by the two firms. Korean mobile-phone maker, LG Electronics, rose 1.7%.

[R]6:30AM European markets advanced as crude oil prices eased.[/R]
European markets rose on Tuesday. The FTSE 100 in London was 0.2% higher at 5,842.6, the Xetra Dax in Frankfurt nudged up 0.8% to 5,668.78 and the CAC-40 in Paris advanced 0.5% at 4,983.28. In spite of the retreat most oil companies advanced with Neste Oil up 1.4%, Norsk Hydro gaining 0.9% and Statoil adding 0.8. The sector as a whole though was pushed lower by BP’s 1% retreat in continued fallout from its shutdown of the Prudhoe Bay field.

Metrovacesa, the Spanish property company, advanced 2.7%, as Spain’s stock market regulator said it would not rule on an improved offer for Metrovacesa until September. Salzgitter advanced 5% after the German steel maker sold its entire 17% stake in Vallourec, a French steel tube manufacturer. Vallourec shares slipped 4.4%.

Rheinmetall, a German car parts and defence group, plunged 3.8% on disappointment with a 1.4% rise in first-half operating profit and Swiss reinsurer Converium rose 0.7% after beating forecasts with second-quarter net profit.

Light sweet crude oil for September delivery declined 28 cents to $76.70 a barrel in midmorning, while September Brent at London''s ICE Futures exchange fell 41 cents to $77.89 a barrel. Gold traded at $646.00 an ounce, down $2.50 an ounce from Monday''s close of $648.50.

The euro on Tuesday continued its slight slip against the U.S. dollar ahead of a meeting by the Federal Reserve. The euro purchased $1.1.2835 in early European trading, marginally below its level of $$1.2839 in New York late Friday. The British pound fell to $1.9052 from $1.9061. The dollar gained advanced the Japanese currency, rising to 115.08 yen from 115.07 yen.

[R]5:00AM Gold futures rose, traders await FOMC decision on interest rates.[/R]
December gold finished up $3.50 at $659.50 a troy ounce on the NYME. During the session the contract rose to $663.50 an ounce. The benchmark September silver contract ended 22 cents lower at $12.265 an ounce. The most-traded October platinum closed $10.90 higher at $1,266.90 an ounce. September palladium settled up 5 cents at $327.55 an ounce. The most-traded September copper was down 2.20 cents at $3.6105 per pound.

September crude oil ended up $2.22 to $76.98 a barrel after advancing to $77.30. September heating oil settled up 5.39 cents at $2.1435 a gallon. September gasoline rose 2.01 cents to $2.2516 a gallon and September natural gas finished down 33.9 cents at $6.907 a million British thermal units. On the New York Board of Trade, September Arabica coffee settled 1.70 cents higher at $1.0715. October futures for raw sugar in foreign ports ended 0.14 cent lower at 14.27 cents a pound.