LoVeLesS IdEas

Asian stock markets mixed as Japan's central bank weighs interest rate cuts

HONG KONG (AP) -- Asian stock markets were modestly mixed Thursday, with Japan shares fluctuating amid growing speculation the country's central bank would soon cut interest rates to revive its contracting economy.


The lackluster trade came after Wall Street dipped as early enthusiasm about the Federal Reserve's historic rate cut gave way to concerns that a turnaround in the U.S. economy was still far off.

In Tokyo, the Nikkei 225 stock average was up 32.19 points, or 0.4 percent, at 8,644.71 after flitting in and out of negative territory. Hong Kong's Hang Seng Index lost about 0.9 percent to 15,326.59.

Benchmarks in Australia, South Korea and mainland China edged higher, while those in Singapore and the Philippines declined.

The dollar recovered slightly from 13-year lows against the yen, and oil prices slid to 4 1/2-year lows below $40 a barrel.

"This is not the start of a bull market, it's still a bear market rally," said Francis Lun, general manager of Fulbright Securities Ltd. "The economy is still in the doldrums, and I think people are thinking the zero interest rate policy is due to a long recession ahead."

The U.S. rate cut has raise expectations the Bank of Japan will follow suit and slash its key rate to nearly zero when it wraps up a two-day meeting Friday. Goldman Sachs predicts the bank will shave its overnight call rate target from the current 0.3 percent to 0.15 percent, while JP Morgan forecasts a cut to 0.1 percent.

Financials gained on the speculation, with megabank Mitsubishi UFJ Financial Group Inc. adding 2.1 percent. Sumitomo Mitsui Financial Group Inc., Japan's second-largest by market value, soared 7 percent.

Meanwhile, Honda dropped 3.4 percent a day after Japan's No. 2 carmaker said it was slashing its annual profit forecast due to the global slowdown.

In China, a new stimulus package unveiled Wednesday to boost the country's slumping real estate market lifted shares in property firms. China Overseas and China Resources rose more than 2 percent in Hong Kong trade.

Overnight in New York, the Dow Jones industrial average lost 99.80, or 1.12 percent, to 8,824.34, after falling as many as 146 points earlier in the session. The Standard & Poor's 500 index slipped 8.76, or 0.96 percent, to 904.4.

Futures pointed to a rebound Thursday on Wall Street. Dow futures were up 20 points, or 0.2 percent, to 8,820, while S&P futures were up 1 point, or 0.1 percent, to 904.

The yen leveled off after a dramatic surge against the dollar, as Japan warned of possible intervention in the foreign exchange market. The dollar, which hit a 13-year low Wednesday, traded at 87.86 yen, up from 87.21 earlier.

Finance Minister Shoichi Nakagawa told reporters he would "implement appropriate measures" regarding the yen's gains, whic erodes exporters' foreign income.

"For export manufacturers the acceleration of the strong yen is a negative factor," he said.

Oil prices, meanwhile, slid further as investor pessimism over global crude demand outweighed OPEC's largest-ever production cut. The January contract was down 15 cents at $39.91 a barrel in Asian trade, at one point falling as low as $39.19 -- a level not seen since at least July 2004.