UPDATE: Asian Shares Mostly Higher; Gold Miners Solid

(Adds information, quotes, updates/adds market levels)

By Colin Ng and Kirsty Green

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian stock markets were mostly higher Wednesday, with gold miners outperforming, although many investors were on the sidelines ahead of the results of the U.S. Federal Reserve's policy meeting.

The Fed was widely expected to stand pat on rates later, but investors were focussed on its commentary on the U.S. economic outlook and any hints at when it could tighten policy.

UBS head of institutional sales George Kanaan in Sydney said any surprises from the Fed could rock the equities market. "Obviously the market will look at every nook and cranny of what the Fed says tonight, but there are no great expectations of a change in rhetoric," he said. "That said, if they do say something different, it could have quite an impact," he added.

Australia's S&P/ASX 200 was off 0.1%, Japan's Nikkei 225 was flat while South Korea's Kospi Composite was 0.9% higher and Hong Kong's Hang Seng Index gained 1.7%. The Dow Jones Industrial Average futures contract was 31 points higher in screen trade, after the DJIA ended off 0.2% Tuesday.

Gold miners were again in the limelight, after spot gold rallied to a record high of $1,089.10 per troy ounce in late New York trade Tuesday, helped by news of the Indian central bank's purchase of gold from the International Monetary Fund. Spot gold was recently at $1,082.25 per troy ounce, down $2.05 from the New York close.

Barclays Capital said gold had broken out of its recent consolidation and was now reaching for the $1,100 target. "The consistent one-two month sideways phases since the summer have acted as a springboard for further gains, and the repeat of this pattern is encouraging for stability at higher levels," it said.

In Sydney, Newcrest Mining was up 3.1%, Lihir Gold gained 3.8% and Kingsgate Consolidated rose 6.3%. Japanese resource stocks were also helped by the rise in gold with Sumitomo Metal Mining up 4.0%. In China, Zijin Mining Group was up 1.4% and Shandong Gold-Mining was 2.9% higher.

The overall Australian market was unable to sustain earlier gains, after weaker-than-expected retail sales data. September retail sales were down 0.2% from August, compared with expectations for a 0.4% rise.

Retail sales will be soft for the rest of the year, said ANZ Economist Alex Joiner. With no sign of a massive recovery in the labor market and wage growth muted, "households are going to be very cautious going into Christmas, with spending levels pared back from the artificially-boosted levels we got from the cash hand outs earlier this year," he said.

Westpac Bank was up 1.1% after it released its full year results. Other Australian banks were helped by the Westpac news with ANZ Banking up 0.5%.

Tokyo's chip-related shares were falling on Morgan Stanley's rating cut on the semiconductor industry with Tokyo Electron off 4.5%. Korean chipmakers were mixed after the Morgan Stanley move with Samsung Electronics down 1.0% and Hynix up 1.6%.

In Hong Kong, HSBC was up 0.6% on news of job cuts in its U.K. operations. But oil plays were being supported by gains in crude oil futures Tuesday with Cnooc up 2.1% and PetroChina up 3.1%.

The Korean market meanwhile was helped by a rise in financial stocks, which had recently lagged the market. Eugene Investment & Securities analyst Kwak Byong-ryel called the market's rise a technical rebound, after a six-session drop; "It's hard to find a cue now...amid uncertainties over global financial firms and before the FOMC policy meeting," he said.

Samsung Securities was up 5.4%, KB Financial gained 0.9%, while Shinhan Financial rose 2.0% after reporting strong third-quarter results.

Seoul Semiconductor gained 4.1%. Singapore state investment company Temasek Holdings will invest KRW284.7 billion ($241 million) in it and its affiliate through a rights offering, said Daishin Securities, which advised on the deal.

China property developers were mostly lower on speculation that the Chinese government will end property-boosting measures by year end and some banks may soon tighten lending. China Vanke was down 2.4%.

In other markets, New Zealand's NZX-50 was up 0.3%, China's Shanghai Composite was up 0.6% and Taiwan's main index was 1.4% higher. Singapore's Straits Times Index was 0.8% higher while Malaysia's main index was up 0.6% and Indonesian shares were up 0.5%. Philippine shares were 0.6% higher.

Trade in foreign exchange markets was subdued ahead of the FOMC outcome. The U.S. dollar was slightly lower against the yen and traded at Y90.23 from Y90.37 in late New York trade Tuesday. The euro was at $1.4732 from $1.4721 and Y132.93 from Y133.00.

The lead Japanese government bond futures contract was down 0.15 at 138.12 points, weighed by Tuesday's weakness in long-dated U.S. Treasurys. The 10-year cash yield was off 1.0 basis point at 1.365%.

Shinji Ebihara, analyst at Mizuho Securities said active bond trade was unlikely ahead of the FOMC results. Still, he added that JGB futures could be under pressure ahead of the government's Y2.1 trillion 10-year bond tender Thursday as well as caution ahead of 10-year and 30-year U.S. Treasury auctions next week.

The December Nymex crude oil futures contract was recently down 20 cents at $79.40 per barrel after settling $1.47 higher Tuesday.

The three-month London Metals Exchange copper futures contract was higher as positive U.S. factory goods data stoked hopes of manufacturing sector strength. It was was recently up 2% at $6,598 per ton.

-Colin Ng, Dow Jones Newswires; +65-6415-4140; colin.ng@dowjones.com

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(END) Dow Jones Newswires

November 03, 2009 23:36 ET (04:36 GMT)


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