Sun, Feb 19, 2006 - Page 10 News List

Sharp drop in NIKKEI weighs down Asian markets

REGIONAL IMPACT The markets in Taipei, Mumbai, Shanghai, Sydney, Singapore and Kuala Lumpur dropped as Tokyo offset gains driven by Wall Street's overnight advance

AFP , HONG KONG

A man talks on a cell phone outside a securities firm in downtown Tokyo on Friday. The NIKKEI 225 index shed 330.22 points, or 2.06 percent, to finish at 15,713.45 on Friday, despite better-than-expected economic growth figures amid signs of waning foreign-investor demand.

PHOTO: AP

Asian stocks closed mixed on Friday with a sharp fall in Tokyo weighing on sentiment and offsetting the positive impact from overnight gains on Wall Street.

Tokyo dived more than 2 percent after growth figures showed the economy was growing faster than expected, fuelling the prospect of rising interest rates and this impacted on markets elsewhere in the region.

Taipei, Mumbai, Shanghai, Sydney, Singapore and Kuala Lumpur also fell, while gains in Hong Kong and Jakarta were limited in tight rangebound trade.

Seoul bucked the trend and closed sharply higher on support for banks after faltering earlier on in response to Tokyo. Bangkok also rose with foreign support improving after a court decided not to investigate Thai Prime Minister Thaksin Shinawatra's business dealings.

In Taipei share prices closed 0.15 percent lower as profit-taking emerged to reverse early gains driven by Wall Street's positive overnight performance.

Dealers said the market lacked conviction at these levels and investors clearly preferred to take some profits rather than push prices too far ahead.

The TAIEX fell 10.18 points at 6,673.75 on turnover of NT$94.29 billion (US$2.91 billion).

"There was not enough enthusiasm about pushing the upside as too many investors were ready to pocket their gains," SinoPac Securities Corp (建華證券) assistant vice president Alvin Teng (鄧可欣) said.

An immediate contraction in turnover deprived the market of the momentum needed to help it through 6,700 points, he said.

"For those who monitor market charts, a pull-back to around 6,400-6,500 points, or the 72-day moving average for the benchmark index, seems increasingly possible," Teng said.

Tokyo share prices lost over 2 percent as worries about the prospect of rising interest rates overshadowed strong economic growth figures.

Dealers said news that Japan's economy grew at a 5.5 percent annualized rate in the fourth quarter of last year showed the recovery was well on track, but the market had already priced in a strong figure.

Foreign investors, who had ploughed into the market last year to help drive gains of some 40 percent, continued on the sell-side, adding to the pressure.

The NIKKEI-225 index dropped 330.22 points to 15,713.45.

The market started the day on an upbeat note after news that Japan's GDP grew 1.4 percent in the three months to December from the previous quarter. That beat market expectations for 1.2 percent and was significantly stronger than the 0.3 percent pace seen in the third quarter of last year.

"The GDP data was, indeed, stronger than the market consensus and that is generally good news for the market," said Hideyuki Suzuki, a strategist at SBI Securities.

Seoul share prices closed 1.40 percent higher, with KEPCO, large-cap ITs and bank stocks leading the advance.

Dealers said the market faltered at one stage due to the heavy losses in Tokyo but strong foreign and institutional investor support offset profit-taking by retail investors, allowing the market to chalk up a second day of gains.

It appears that after recent very volatile trade, the market has established a strong bottom at 1,300 points and should be able to hold that going forward.

The KOSPI index rose 18.41 points at 1,332.73.

Hong Kong share prices closed 0.16 percent higher on the back of gains in HSBC and select China plays amid a continued inflow of institutional funds.

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