Monday, December 6, 2010

Asian Shares End Mixed; Riversdale Jumps On Rio Tinto Talks

Asian Shares End Mixed; Riversdale Jumps On Rio Tinto Talks ; Asian stocks ended mixed on Monday as investors considered disappointing U.S. non-farm payrolls data released Friday and Federal Reserve Chairman Ben Bernanke's comment that a further expansion of the central bank's asset purchase program was possible.

Shares of Riversdale Mining surged in Australia on confirmation it was in talks with Rio Tinto about a takeover offer. Honda Motor and India's Hero Honda Motors declined on the Japanese company's reported plans to exit their Indian joint venture.

In Tokyo, the Nikkei Stock Average slipped 0.1%, Australia's S&P/ASX 200 edged down 0.1% and South Korea's Kospi dropped 0.2%. China's Shanghai Composite gained 0.5% and Hong Kong's Hang Seng Index declined 0.4%. Dow Jones Industrial Average futures were down 23 points in screen trade.

"Traders essentially viewed the disappointing jobs number on Friday in the U.S. as building another case for more stimulus measures. The Federal Reserve has indicated they may go into bat again, and the market looks like it wants more," said David Taylor, markets analyst at CMC Markets in Sydney.

Federal Reserve Chairman Ben Bernanke said on CBS' "60 Minutes" news program, aired on Sunday, that "it's certainly possible" the central bank could expand a program to buy $600 billion in Treasury securities beyond the initial target it announced about a month ago.

"The language he used is very measured. If anything I find what he said quite reassuring [that] they're going to use whatever ability they have to keep interest rates low," said Ben Collett, head of Japanese equities at Louis Capital Markets.

In Sydney, Riversdale Mining surged 15.7% to A$16.31 after confirming mining giant Rio Tinto had discussed an indicative A$15-a-share bid for the coking coal miner, but added that there's been no formal proposal. Rio Tinto fell 0.5%.

But the overall market failed to match Wall Street's modest gains on Friday, with financial plays losing ground. Westpac Banking shed 1.1%.

"The lack of strength is disappointing, especially on the encouraging news on Riversdale Mining," said MF Global Senior Trader Anthony Anderson. "Weighing on our market is this Aussie dollar back (up) to 99 (U.S.) cents... that's a big surprise. I don't know if our (stock) market really needs that."

Some major stocks with U.S. dollar earnings fell, with News Corp. down 1.1% and Brambles down 1.0%; News Corp. owns Dow Jones Newswires.

In Tokyo, Honda Motor shed 0.6%, showing a limited reaction to local media reports that said the automaker plans to pull out of a motorcycle joint venture in India with Hero Group and build a new plant in the country. Hero Honda's shares fell 3.2% in India.

"Short-term, Honda's market share will fall, but India is still a market with high growth potential," said SMBC Friend Research Center analyst Shigeru Matsumura. "It's not a major concern over the medium to longer term," he said, noting Honda's brand strength in the market.

The broader market was mixed as exporters declined on a firmer yen, while steel and other commodity-linked stocks rose. Among exporters, Canon fell 1%, while Panasonic Corp. dropped 1.2%.

Iron and steel shares were the best performers on the board, with JFE Holdings rising 2.1%. Kobe Steel closed up 3.0% on a report in the Nikkei business daily that it will team up with five other firms to domestically produce titanium materials for airplanes.

In Seoul, some auto-parts makers rose after the U.S. and South Korea finalized a free trade agreement over the weekend, paving the way for the removal of import tariffs for South Korean-made car parts once the pact takes effect. Hyundai Mobis rose 1.5%, Sejong Industrial gained 3.1% and Hwashin climbed 9.5%.

"Exports of auto parts (to the U.S.) are rapidly rising to meet demand from the U.S. plants of Hyundai Motor and Kia Motors and some 3,000 small-and mid-sized auto parts makers are expected to benefit from the deal," said Choi Dae-sik at HI Investment & Securities.

Shinhan Financial Group jumped 5.0% after the company confirmed an earlier local media report that its President Shin Sang-hoon, who has been suspended from duties since September, will offer his resignation.

Shares in China ended higher on gains in oil producers after crude oil futures rose to a two-year-high. However, with investors uncertain over China's economic policy next year ahead of the early-December Central Economic Work Conference, further gains remain capped, said Li Lei at Gold State Securities.

Among oil plays, PetroChina's Shanghai shares jumped 4.7%, while China Petroleum & Chemical added 2.0%.

Among other markets, New Zealand's NZX-50 climbed 0.3%, Philippine shares rose 1.1%, Singapore's Straits Times Index rose 0.3%, Indonesian shares added 0.7%, Taiwan's Taiex rose 0.9%, India's Sensex edged up 0.1% and Malaysia KLCI rose 0.1%. Thailand's markets were closed for the King's birthday.

In foreign exchange markets, the U.S. dollar recovered some of the ground it lost on Friday against the euro. The single currency was fetching $1.3258 from $1.3414 late in New York Friday, and Y109.81 from Y110.86. The dollar was buying Y82.84 from Y82.64.

Shinkin Asset Management senior dealer Jun Kato in Tokyo said Bernanke's comments weren't overly bearish for the dollar, noting the Fed chief's view that a double-dip recession "doesn't seem likely." Others, however, said the potential for more bond-buying from the Fed will keep the dollar down, and perceived riskier assets higher, over the short term.

December Japanese government bond futures were up 0.60 at 141.48 points, helped by stronger U.S. Treasurys Friday. The 10-year cash yield was at 1.155%, down five basis points. January Nymex crude-oil futures were up 25 cents at $89.44 per barrel on Globex. Spot gold was at $1,413.30 per troy ounce, down $1.20 from its New York close Friday.
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