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UPDATE: Asian Shares Rise As Autos, Chips Gain; Nikkei +1%

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

SINGAPORE (Dow Jones)--Asian shares were off their early peaks Friday though still on course to notch up some solid advances for the week, with automotive stocks rising in Tokyo and Seoul after gains in their U.S. peers.

Chipmakers gained across the region after prices for mainstream memory jumped Thursday, further evidence the beleaguered industry may have reached a bottom.

Japan's Nikkei 225 was up 1.0%, Australia's S&P/ASX 200 up 0.9%, South Korea's Kospi Composite up 0.3%, Taiwan shares up 0.7%, Hong Kong's Hang Seng Index up 0.4% and New Zealand's NZX-50 up 0.3%.

"There's definitely been a change in sentiment across the client base in recent days," said City Index strategist Alex Douglas. "It kicked off with the U.S. stimulus plans and it's helping anything that has been really beaten down. People are trying to get set for the next big move."

Markets in Asia have been supported in recent days by fund buying related to the coming end of the month and end of the quarter, plus the end of the fiscal year in Japan. There has been much talk of pension-fund buying in Tokyo in particular.

Still, bourses were off their initial highs and Singapore's Straits Times Index had slipped 0.3%. U.S. stock futures were down about 0.3% in screen trade.

Friday's volume was on the low side and there was some caution as the weekend drew near, especially given the size of the recent gains. "We experienced irrationality on the way down and now we're experiencing it on the way up," said Justin Gallagher, head of Sydney sales at RBS.

Among auto stocks, Japan's Toyota was up 2.8%, Nissan up 4.3% and Honda up 2.9%. Korea's Hyundai Motor gained 3.0% and Kia Motors 3.6%, helped too by news the government was cutting auto-related taxes. From May 1 to the end of this year, consumers will be given a 70% cut in taxes when they replace cars registered before January 1, 2000, with new models.

Real estate shares and trusts gained in Japan after the Nikkei reported the government was considering establishing a fund to support REITs. Japan Real Estate Investment gained 4.1%.

Shipping stocks fell though with Nippon Yusen down 1.9% and Mitsui O.S.K. Lines off 1.8% after Nippon Yusen Thursday cut its net profit outlook for the fiscal year ending March 31. "This shows global shipping market conditions are weighing on shippers' bottom lines more than expected," said SMBC Friend Research Center analyst Mitsuru Miyazaki.

Shares of Asia's dynamic random access memory chip makers surged after chip prices on the spot market rose, with a near-14% spike in mainstream DDR2 1Gb 667MHz prices Thursday. Taiwan's Powerchip was up 7% with ProMOS up 6.9% and Nanya Technology up 7%, while in Japan, Elpida Memory had added 14%, still helped too by news of its capital raising. Korea's Samsung Electronics was up 2.5% with Hynix adding 8.1%.

Still, Stanley Chou, a manager at Mega International Investment Services, said the sector's rally was probably liquidity driven. "We need to observe chip prices for a few more days to decide whether a solid bottom is there," he said.

Commodity stocks were higher in Australia, even as some money came off financials. Rio Tinto jumped 7.1% with its chief financial officer saying Thursday the company had contingency plans if it failed to secure a proposed $19.5 billion investment from Aluminum Corp. of China.

The Shanghai Composite Index was up 1.1%, though Morgan Stanley analysts sounded a cautionary note for the earnings of mainland China companies. "Recent market optimism, triggered by early recovery of several macro indicators, we believe, is overdone. The market has just entered an earnings recession and is far from an earnings recovery."

Malaysian shares were up 0.2% with Philippine stocks 2.7% higher and Indonesian shares up 3.0%. Jakarta's market was closed Thursday for a public holiday.

In currency trade the Japanese yen was slightly higher against the U.S. dollar and the euro, even as stock markets rose.

Several traders have spoken in recent days about a disconnect between stocks and currencies - with risk aversion still more prevalent in foreign exchange trade. Others have talked about the yen being supported by repatriation of funds before the end of the Japanese fiscal year.

The U.S. dollar was at Y98.25, from Y98.85 earlier in Asia, and the euro at Y133.33, from an early high of Y133.76. The single currency was at $1.3568, from $1.3501.

The New Zealand dollar ticked higher as fourth quarter gross domestic product data weren't quite as bad as forecast, with the currency at US$0.5774. GDP fell 0.9% on the quarter, from a revised 0.5% third quarter contraction, though not as much as the 1.0% decline tipped in a Dow Jones Newswires poll of economists.

Japanese government bond futures were off their lows as the Nikkei pulled back from its highs. The lead contract was down 0.03 at 138.45, after touching 138.08.

Spot gold was down $3.70 at $930.50 a troy ounce from New York levels. With the U.S. economy showing tentative signs of recovery, gold needed "more bad news" to regain momentum for the short-term, and to drive the risk aversion that generally benefited bullion, said Ronald Leung, director at Lee Cheong gold dealers.

LME three-month copper gained 2.0% to $4,168 a metric ton, setting a five-month high, with Chinese arbitrage buying, said ANZ commodity strategist Mark Pervan.

May Nymex crude oil futures were 47 cents lower at $53.87 a barrel on Globex.

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

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(END) Dow Jones Newswires

March 26, 2009 23:17 ET (03:17 GMT)


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