UPDATE: Asian Shares Mostly Lower; Sanyo Electric Tumbles

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

By Colin Ng and Philip Vahn

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian stock markets were mostly lower Thursday, weighed by Wall Street's weak finish and as the U.S. Federal Reserve's policy statement provided few fresh cues. In Tokyo, Sanyo Electric tumbled on a report that Panasonic Corp. had bought a stake in the firm at a large discount.

The Federal Open Market Committee left its target interest rate unchanged and maintained its language suggesting ultra-low rates would be maintained for an extended period. The result was widely expected, and a slight positive for risk appetite as some investors were worried the Fed's language would be more hawkish.

Still, markets were hobbled by Wall Street's performance. The Dow Jones Industrial Average lost most of its intraday gains in the last half hour of trade and closed up just 0.3%.

"It's highly likely that after the 'non-event' Fed decision that Asian markets will trade flat to slightly lower in coming days, with the next catalyst for stocks to move definitively in a particular direction being the U.S. non-farms payroll report due out Friday morning (U.S. time)," said IG Markets in a note.

Japan's Nikkei 225 was down 1.3% with Australia's S&P/ASX 200 off 0.6% and South Korea's Kospi Composite down 1.5%. Hong Kong's Hang Seng Index lost 0.9%, Taiwan's main index was down 0.4% and the Shanghai Composite was 0.1% higher thanks to rotational interest in railway and pharmaceutical companies.

Sentiment in the Japanese stock market was partly soured by a lack of local cues to buy ahead of bellwether Toyota Motor's second quarter earnings due after the market's close. Also, "investors are concerned about limited gains in the U.S. market," said Fujio Ando, senior managing director at Chibagin Asset Management in Tokyo. DJIA futures were 38 points lower in screen trade.

Sanyo Electric tumbled 19% to Y174 after the Nikkei reported that Sumitomo Mitsui Financial Group and Daiwa Securities Group have decided to sell their stake in the company to Panasonic Corp for Y131, a sharp discount to Sanyo's Wednesday closing price of Y216.

The pricing was not new - the Y131 acquisition price was set in late December after Sanyo's main shareholders agreed to accept a 4% discount to the stock price at the time. Since then, investors have bid up Sanyo's share price amid growing interest in battery technology and a broader market rally, but investors were selling on Panasonic's formal launch of its take over bid.

Nissan Motor rose 1.1% on better-than-expected second quarter results which were released after the market closed Wednesday. The company reported a 65% drop in net profit to Y25.53 billion for the July-September period and raised its forecast for the full year, becoming the latest Japanese car maker to upgrade its outlook.

In Korea, "some investors seem to think yesterday's technical rebound might have been overdone, so they seem to have decided to lock in profits" early in the session, said Lee Kyung-soo at Taurus Investment & Securities.

Doosan Heavy was down 7.2% and Doosan Infracore lost 3.8% after reporting disappointing third-quarter earnings Wednesday.

In Australia, a narrower-than-expected September trade deficit failed to lift the stock market as economists warned the overall deterioration in the country's trade performance will still drag on economic growth in the third quarter.

The seasonally-adjusted balance on trade in goods and services widened to a deficit of A$1.85 billion in September from a deficit of A$1.65 billion in August, the Australian Bureau of Statistics said. Economists expected a deficit of A$2.10 billion.

Annette Beacher, senior economist at TD Securities, said Australia's growing import bill will be a drag on growth though it was also a sign that domestic demand was perking up.

Australian banks were mostly higher despite falls for their U.S. peers. Westpac was up 0.5% after Macquarie Equities upgraded the stock to Outperform, while Commonwealth Bank gained 1.0% after it borrowed EUR1.5 billion via seven-year notes in Europe, indicating investors had the confidence to buy longer-dated debt from the bank without a government guarantee. ANZ Bank was a major drag on the market, and was down 2.6% as the stock went ex-dividend.

New Zealand's NZX-50 was 0.7% lower, Philippine shares rose 1.3%, Malaysian shares fell 0.1%, Singapore's Straits Times Index was 0.5% lower and Thai shares were down 0.5%.

"Further strong equity gains are hard to justify with higher valuations across the board in Asia - expectations will need to be moderated," said DBS Asia equity strategist Joanne Goh in Singapore.

Foreign exchange markets were looking past the Fed statement and focussed on monetary policy meetings for from the European Central Bank and the Bank of England, ending later in the global day as well as U.S. jobs data Friday.

The U.S. dollar was at Y90.48 from Y90.81 in late New York trade Wednesday. The euro was lower as Japanese exporters settled accounts, and was trading at $1.4844 from $1.4872 and Y134.32 from Y134.92.

The lead Japanese government bond futures contract was lower, tracking weakness in U.S. Treasurys Wednesday. It was down 0.24 at 137.72 points while the 10-year cash yield was up 2.5 basis points at 1.425%.

The Nymex December oil futures contract was down 48 cents at $79.92 per barrel, after settling 80 cents higher Wednesday.

The three-month London Metals Exchange copper futures contract was at $6,552 per ton, down $23 from the London kerb, while aluminum was at $1,917 per ton, down $8. Spot gold was at $1,087.70 per troy ounce, down $4.20 from the New York close.

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

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November 04, 2009 23:32 ET (04:32 GMT)


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