Asian stocks closed narrowly mixed on Friday, with investors remaining uncertain about the outlook for inflation and US interest rates in the wake of Hurricane Katrina, although Tokyo bucked the trend with sharp gains, dealers said.
They said caution was the key word, with few willing to take any aggressive positions ahead of the weekend amid conflicting views about whether the US Federal Result will pause or press ahead with its policy of measured interest rate hikes.
How oil prices and increasing inflation pressure develop will provide a real test of sentiment, given the sustained regional run-up, which has seen several markets at record levels.
On the day, Tokyo rose 1.26 percent to fresh four-year highs as investor confidence continued to improve and the market was reassured by polls showing Japanese Prime Minister Junichiro Koizumi set to win today's general elections with ease.
Seoul added 0.63 percent and Mumbai managed a marginal few points to allow both to extend their record-breaking performance while Jakarta put on 1.67 percent.
Taiwanese share prices closed 0.50 percent lower, with sentiment undermined by the Wall Street's losses and a further depreciation in the New Taiwan dollar, dealers said.
They said that the continued weakness in the local currency has raised concerns foreign investors may be taking funds out of the country, with their stance a key indicator for their local peers and the market as a whole.
The weighted index closed down 30.82 points at 6,119.06, off a high of 6,167.90 and a low of 6,108.40, on turnover of NT$57.24 billion (US$1.75 billion). Declines led gainers 634 to 278, with 126 stocks unchanged.
"Investors were preparing for short-term plays as they expect the market to extend its consolidation," said Samson Chueh, an assistant vice president at Fuhwa Securities.
"They were reluctant to build position because the bourse is looking to define a bottom," he said.
Lingering concerns over Taiwan's economic prospects and the impact of Hurricane Katrina kept investors to the sidelines in the absence of any major fresh news to the market, Chueh added.
Japanese share prices rose 1.26 percent to another four-year high on record trading volumes, riding a wave of optimism about Japan's economy two days ahead of a general election, dealers said.
Relatively upbeat earning outlooks from key US chipmakers Intel and Texas Instruments sparked a rally in Japanese technology shares.
Investors were able to set aside jitters over this weekend's general election in Japan, with polls showing the market-friendly Koizumi's party enjoying a comfortable lead over rivals.
The Tokyo Stock Exchange's benchmark NIKKEI-225 index gained 158.15 points to 12,692.04 as an unprecedented 3.04 billion shares changed hands.
The broader TOPIX index of all first-section shares rose 14.45 points or 1.13 percent to 1,293.35.
A rush of recent data showing Japan's economic recovery remains on track has seen Tokyo shares rise to a series of four-year bests in recent weeks, with optimism towards the tech sector providing the latest fillip.
South Korean share prices chalked up another record finish, adding 0.63 percent led by financial and telecom stocks as investors shrugged off Wall Street's weaker close and a central bank warning of a possible rate hike, dealers said.