TOKYO (AFP) — A late rally lifted Asian stock markets Tuesday as bargain hunters emerged despite fresh losses overnight on Wall Street sparked by growing credit worries, dealers said.
Most markets around the region reversed early losses to turn higher in late trade, a day after suffering steep falls.
Tokyo and Seoul both closed up 1.0 percent. Hong Kong was 0.5 percent higher in late trade as Singapore rose 0.9 percent and Shanghai added 0.47 percent.
"The short-term rebound was expected. While trading volume remained thin, major issues such as Nippon Steel stopped falling, which was a sign that the trend has changed," said Investrust analyst Hiroyuki Fukunaga in Tokyo.
A pause in the yen's rise against the dollar also supported sentiment.
"If the dollar stays at current levels, Japanese exporters will manage," Fukunaga said, "and the market may see a bottoming out in a month or two."
Kuala Lumpur rallied 2.5 percent after steep losses a day earlier triggered by unprecedented election losses for Malaysia's ruling coalition.
Sydney closed down 0.9 percent, well off its lows of the day, while Manila ended almost flat.
Overnight in New York the Dow Jones index dropped 1.29 percent, hitting the lowest closing level since October 2006.
"There is a deepening sense of financial crisis within the global money markets," said Sean Darby, an analyst with Nomura in Hong Kong.
"Unless credit risk indicators normalise, equities will likely face distress selling."
US investors were spooked by news of a big quarterly loss at US private equity firm Blackstone, which blamed a "meltdown in the credit markets."
There were also growing concerns about the financial health of Bear Stearns, which issued a statement denying market rumours of a cash crunch at the US investment bank after its shares plunged 11 percent.
Lehman Brothers meanwhile was preparing to lay off around 1,400 employees or about five percent of its total workforce, a source said.
"Market sentiment is quite weak and investors are generally cautious. The US economy is definitely slowing down and will continue to remain weak," said Conita Hung, research head at Delta Asia Securities in Hong Kong.
Record high oil prices, a housing slump, declining consumer spending and a deteriorating labour market are all making investors wary about the outlook for the US economy, which many analysts fear is already in a recession.
"In particular, there is concern that the subprime loan lending woes may spill over to include prime lending, adding to the credit concerns," Shinko Securities strategist Tsuyoshi Segawa said.
Oil eased from record levels in Asia but underlying momentum to push higher remained strong because of the weak greenback and supply concerns, dealers said.
New York's light sweet crude for April delivery fell 25 cents to 107.65 dollars a barrel in late Asian trade.
Oil "is really seen as a safe haven at the moment so there is a lot of momentum which can continue to push prices higher," said Mark Pervan, a senior commodity strategist with Australia's ANZ bank in Melbourne.
The dollar was at 101.77 yen in Tokyo afternoon trade, compared with 101.73 late Monday in New York, hovering close to an eight-year low.
The euro was stable at 1.5362 dollars, taking a breather after retreating from Friday's all-time high of 1.5464 dollars.
Copyright © 2009 AFP. All rights reserved. More »
