Asian shares were mostly lower, but Nikkei up after Japan cuts interest rate

By Pamela Sampson, AP
Tuesday, October 5, 2010

Asian shares mostly lower; Japan up after rate cut

BANGKOK — Weak U.S. economic indicators sent most Asian stock markets lower Tuesday but Japanese shares climbed after the central bank cut its key interest rate to effectively zero.

Oil prices held above $81 a barrel as traders looked for a new catalyst to extend last week’s rally amid weak regional stock markets. The dollar rose against the yen but fell against the euro.

Japan’s Nikkei 225 stock average rose out of negative territory after the Bank of Japan cut its key interest rate to range of zero to 0.1 percent, hoping to boost a faltering recovery and deflate the strong yen. The index was up 112.13 points, or 1.2 percent, at 9,493.19.

Elsewhere, traders were refraining from major moves ahead of some potentially important events for stocks, including Friday’s U.S. monthly jobs survey and earnings Thursday from Dow industrials component Alcoa Inc., which traditionally kicks off the quarterly earnings season.

Hong Kong’s Hang Seng index was down 0.4 percent to 22,529.07 and South Korea’s Kospi dropped 0.3 percent to 1,873.50. Australia’s S&P/ASX 200 was down 0.3 percent to 4,612.00 following the Reserve Bank of Australia’s decision to leave its main interest rate unchanged.

Analysts said Wall Street provided the main drag on the region’s stocks amid weak economic indicators.

“Overall the market is still pretty flat,” said Jackson Wong, vice president of Tanrich Securities in Hong Kong. “Negative sentiment from the U.S. provided an excuse for investors to take profits.”

Wong also said that the dollar’s rebound — on Monday it rose from a six-month low against the euro — led investors to avoid riskier assets like stocks and seek out the safety of the greenback.

The Australian central bank’s decision also helped renew interest in the U.S. dollar, Wong said. Markets had expected the central bank to hike its main interest rate, which would have made Australian dollar assets like bonds or deposits relatively more attractive.

In New York on Monday, the Dow Jones industrial average fell 0.7 percent to close at 10,751.27. The index lost nearly 80 points after factory orders fell 0.5 percent in August — slightly more than expected — and contracts for new homes remained far below last year’s pace.

The broader Standard & Poor’s 500 index fell 0.8 percent to 1,137.03, and the Nasdaq composite index shed 1.1 percent to 2,344.52.

In currencies, the dollar rose to 83.86 yen from 83.59 yen late Monday in New York. The euro rose to $1.3705 from $1.3665.

Benchmark oil for November delivery was up 8 cents to $81.55 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 11 cents to settle at $81.47 on Monday. Earlier on Monday, it rose to $82.38, the highest level since Aug. 6.

will not be displayed