UPDATE: Asian Shares Mostly Dn;Aiful Under Pressure In Japan

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

By Rosalind Mathieson and Philip Vahn

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian share markets were mostly lower Friday, with caution setting in after a recent string of gains. Japanese consumer financing company Aiful's shares were under pressure after it said it was preparing to apply for debt relief procedures.

Japan's Nikkei 225 was down 1.2%, with that market to be shut for an extended holiday Monday-Wednesday, while Australia's S&P/ASX 200 was 0.9% lower and South Korea's Kospi Composite up 0.3%.

Hong Kong's Hang Seng Index was 0.3% lower with the Shanghai Composite down 0.2% and Taiwan's main index flat.

Traders said the choppy markets were no great surprise, with investors growing a little uneasy at the pace of the recent gains. The Nikkei, for example, added 1.7% Thursday for a three-day total gain of 2.4%.

"Wall Street stopped reacting to good news last night and there are a few negatives, such as continuing jobless claims, that were being ignored on the way up," said Patersons Senior Private Client Adviser Chris Blair in Sydney. "I think people are looking a bit deeper because the market has been so strong." The Dow Jones Industrial Average slipped 0.1% Thursday, with DJIA futures recently 36 points lower in screen trade.

Aiful was 5.7% lower in Japan on news of its debt relief plan. It said it had been consulting the Japanese Association of Turnaround Professionals as part of efforts to revive its business. Fellow consumer finance firm Promise dropped 8.9%.

Earlier, the Nikkei reported Aiful was finalizing plans to ask Sumitomo Trust & Banking, Aozora Bank and other lenders to suspend repayments on roughly Y290 billion in debt to next March. Consumer lenders were collectively down 6.3% with Takafuji and Promise both down 9.9%. Sumitomo Trust & Banking shares were down 1.6%, with Aozora falling 3.7%.

"Recent trading cues are all negative for financials," said Yumi Nishimura, market analyst at Daiwa Securities SMBC. There have been some concerns the new Democratic Party of Japan-led government may take steps to support small business, hurting lenders in the process.

"At this point there are too many uncertain elements in the new administration's economic policies," said Nikko Cordial strategist Tsuyoshi Kawata. Among regional banks, Chiba Bank was down 2.4% and Bank of Yokohama was down 2.6%.

In some markets, traders were watching for potential outflows related to the FTSE Group's rebalancing, with the addition of a fifth country, South Korea, to its Developed Asia Pacific ex-Japan Index.

The long-awaited move, which was first announced a year earlier, will lower the weightings of other countries represented in the index: Australia, Hong Kong, New Zealand and Singapore.

Continued buying by foreign funds was supporting shares in Korea with shipbuilders and automakers higher. Daewoo Shipbuilding was up 2.2% while Hyundai Motor was up 1.0%.

Poly (Hong Kong) Investments Ltd. was up 14.9% after it said it planned to sell a 2.3% stake to China's sovereign-wealth fund for HK$409 million, and also planned to sell shares to its parent company for HK$2.74 billion in exchange for property assets in various Chinese cities.

Commodity stocks were mostly lower in Sydney as base metals lost some momentum, with BHP Billiton down 2.2%.

Still, Arrow Energy gained 3.1% and Liquified Natural Gas Ltd added 0.7%, after Norway's Golar LNG said it had agreed to sell gas from the proposed Fisherman's Landing LNG project in Queensland state to Toyota Tsusho Corp. Liquified Natural Gas Ltd is developing the project and Arrow has agreed to provide it with feedstock.

In Taiwan, Chi Mei Optoelectronics rose 1.5% after the Commercial Times reported, citing unnamed equipment suppliers, that the tech firm plans to resume installing equipment at its 8.5-generation flat-panel plant at the end of September.

Malaysian shares lost 0.2% with Philippine shares down 0.1%, Indonesian shares 0.6% higher and Singapore's Straits Times Index down 0.3%. Thai shares were 0.2% higher and New Zealand's NZX-50 was down 0.3%.

In currency markets the euro was holding near its late-New York levels against the U.S. dollar and the Japanese yen. The single currency was at $1.4714, from $1.4737 in New York, and at Y134.31, from Y134.38, while the U.S. dollar was steady at Y91.23.

BNP Paribas strategists said dollar/yen levels near Y91.30 were a good selling opportunity, given their general view that savings and term deposits will roll into higher-yielding assets in coming months, hurting the greenback. "Currency markets will act accordingly, with high-yielding currencies now taking the lead in a dollar-weakening environment."

The Australian dollar was also trading quietly, around US$0.8690, though RBS strategist Greg Gibbs said the currency was likely to hit US$0.8900 before the end of the year. "Relatively strong growth in Australia, maintaining a substantial yield advantage, and a sense that Asia led by China and India can sustain growth, as it has proven to do this year, lessen the risk of a big setback in the Australian dollar."

Japanese government bonds nudged higher with the lead futures contract up 0.14 at 138.73 points and the 10-year note yield down one basis point at 1.33%.

Spot gold was steady, down $0.90 from New York, to $1,011.40 a troy ounce, while LME three-month copper slipped $25 from the London kerb, to $6,360 a metric ton.

Front-month Nymex crude oil futures were 43 cents lower on Globex at $72.04 a barrel, after rising sharply earlier in the week. Barclays Capital analysts said crude oil was gaining momentum for "a break to the upside" as the global economy improves.

-Rosalind Mathieson, Dow Jones Newswires; +65-6415-4140; rosalind.mathieson@dowjones.com

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September 18, 2009 00:01 ET (04:01 GMT)


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