HK Advances, Tokyo Falls

Ivaylo
05 Dec, 2006
New York City

Asian markets ended mixed Tuesday, as oil producers and banks pushed Japan''s benchmark lower, while gains in the telecommunications sector helped lift shares in Hong Kong. South Korean stocks declined, as automobile and technology shares fell on continued weakness in the dollar. Chinese stocks climbed to another five-year high in Shanghai, as gains in the property sector. In Taiwan, shares fell slightly, breaking a four-session winning streak.

[R]7:30AM Asian markets ended mixed Tuesday with Japan lower and HK higher.[/R]
Asian markets closed mixed on Tuesday. The Nikkei 225 stock index in Japan shed 0.23% to finish at 16265.76. Oil producers were lower after a slip in crude-oil futures on the NYME overnight. Japan Petroleum Exploration fell 1.1% and Inpex Holdings declined 3.4%.

Sumitomo Mitsui Financial Group declined 2.4% after the banking group announced on Monday that it would issue preferred securities for several hundred billion yen to boost its capital adequacy ratio. Mitsubishi UFJ Financial Group was 1.4% lower and Mizuho Financial Group fell 2.1%. Resona Holdings declined 2% after JP Morgan lowered its rating on the bank to neutral from overweight as higher tax rates lowered the its earnings per share.

Hopes of faster yuan appreciation and gains in telecommunications companies fueled Hong Kong stocks higher. The Hang Seng Index rose 1.3% to 18944.19. The advance was also based on excitement in the telecom sector, with China Netcom Group jumping 8.5%. China Telecom gained 15.6% with investors confirming it is their top pick for the sector, which is likely to undergo profound reforms.

Korea Composite Stock Price Index, or Kospi, fell 0.4% to 1420.59. Automobile and technology stocks declined on the weakdollar, which closed at 924.30 won, down from its last finish at 927.60 won. In Taiwan, the Weighted Price Index of the dropped 0.5% to 7609.9. Australia nudged 0.03% higher, to close at 5,414.2.

The Shanghai Composite Index gained 0.5% to 2173.28, its highest close since July 20, 2001, when it settled at 2179.62. Property developers surged on speculation that a stronger yuan will lift the value of their real-estate holdings. China Vanke advanced 2.4%; Beijing North Star surged by its 10% daily limit and Shanghai Jinqiao Export Processing Zone Development also gained 10%.

[R]6:30AM European markets advanced Tuesday on telecoms, steelmakers.[/R]
European markets were higher on Tuesday. By mid morning, London FTSE 100 climbed 0.6% to 6,084.5, Frankfurt Xetra Dax added 0.6% to 6,331.50, and the CAC 40 in Paris gained 0.6% to 5,329.64.

Advancers

Goldman Sachs raised its recommendation on Vodafone from neutral to buy, saying the share price recovery of the company was in line with a sector-wide rally. Shares of Vodafone gained 2%, while Telenor, the biggest Nordic mobile group, gained 2.3% and Swedish rival TeliaSonera climbed 1%. Cosmote, the Greek mobile telecoms company, was up 1.7%.

Steelmakers also gained after Companhia Siderurgica Nacional of Brazil completed due diligence on Anglo-Dutch target Corus, and was reported to be poised to make a firm offer later in the week. The Amsterdam-listed shares of Corus were flat, while the London-listed stock gained 0.1%.

The wider sector was boosted by the prospect of further consolidation. Thyssen Krupp, the German steelmaker, gained 1.6%, while Salzgitter added 1%. Arcelor-Mittal added 1.1%. Deutsche Börse, the German exchange operator, climbed 1% after WestLB upgraded the stock from hold to add.

Decliners

Greek Alpha Bank was worst performing stock on the market after it completed the sale of 5.2% of its share capital. Alpha Bank fell 2.5%. Consumer electronics group Philips fell 1.1% after its targets for 2007 disappointed.

Oil and gold

Oil prices steadied on Tuesday after a $1 fall the previous day due to mild weather forecasts. U.S. crude was trading at around $62.63 a barrel after falling nearly $1 on Monday. London Brent crude was little changed on the day at $63.32 a barrel.

Gold fell the most in two weeks in London on speculation gains in the dollar against the euro will slow demand for the precious metal as an alternative investment. Gold for immediate delivery fell $3.40, or 0.5%, to $642.80 an ounce in early trading in London, the biggest drop since Nov. 16. Prices have increased 26% in the past year.

Currencies

The US dollar rose against the euro Tuesday, bouncing back from 20-month lows amid expectations of slower U.S. economic growth and higher European interest rates. In late morning trading in Europe, the euro stood at $1.3308, compared with $1.3328 late Monday in New York. The British pound continued to back off its 14-year high against the dollar, falling to $1.9744 on Tuesday from $1.9797 on Monday. The dollar fell to 114.79 Japanese yen, from 115.35 the day before.

[R]5:00AM Gold and silver futures rebounded a bit on Monday on weaker dollar.[/R]
February gold advanced 30 cents to close at $650.90 a troy ounce on the NYME. March silver rose 5.5 cents to $14.245 an ounce, after dropping as low as $14.13.January platinum gained $5.50 to $1,160 an ounce while March palladium added $3.70 to $336.45 an ounce. March copper settled up 0.40 cent at $3.1760 per pound.

January crude oil lost 99 cents to end at $62.44 a barrel, but well up from a low earlier in the day of $61.90. January heating oil settled down 3.88 cents at $1.8089 a gallon. January unleaded gasoline shed 1.81 cents to finish at $1.6674 a gallon. December natural gas settled down 61.6 cents at $7.806 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 3 cents lower at $1.2020 a pound. March futures of raw sugar in foreign ports slipped 0.50 cent to close at 11.76 cents a pound.