Asian stocks lose momentum

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Most Asian markets closed little changed on Tuesday, after initially rising as more investors returned from their lunar new year holidays and took heart from a 0.6 per cent bounce on Wall Street overnight.

Japan’s Nikkei 225 stock average rose as much as 0.9 per cent as trading resumed after a long weekend, but closed the day little changed. Hong Kong’s Hang Seng index closed 1.3 per cent higher and Taiwan’s index lost 1.6 per cent on its first day of trading after a week-long break. Mainland Chinese markets will reopen on Wednesday.

Oil pulled back from $94.72 a barrel – its highest level for a month – reached overnight in the US, to trade at $93.15 by late afternoon in East Asia.

Platinum reached a lifetime high of $1,972.75 a troy ounce on worries about disruption to platinum production in South Africa. Its sister metal palladium rose to its highest since September 2001 at $447.25 an ounce.

The MSCI Asia Pacific index rose 0.6 per cent by late afternoon, after dropping 0.4 per cent earlier in the morning session.

“Markets in Asia are still largely following the lead of the US today. People are still very confused about that they should be doing,” said Garry Evans, Asia Pacific equity strategist at HSBC in Hong Kong.

“In the next few weeks there’s going to be lots more bad news [in the US] coming out,” he said. ”Maybe we’ll see the first signs of default rates rising.”

In Japan, the Nikkei had a volatile day that ended with little changed, up just 4.7 points at 13,021.96. The broader Topix was 0.1 per cent lower 1,286.10. March Topix futures were trading normally, after the exchange fixed a computer problem that disrupted their trading on Friday.

Canon rose by 1.9 per cent to Y4,390. Sumitomo Mitsui Construction fell by 11.8 per cent to Y97. Millea Holdings, the insurance company, fell by 5.7 per cent to Y3,810.

In Hong Kong, a newspaper report that the government would cut income tax in the next budget and raise tax-free allowances helped the Hang Seng index rise by 2 per cent during the morning. But the rally faltered in the afternoon and the index pared those gains, closing 1.4 per cent higher at 22,921.67.

Manufacturing and finance sectors led the rise. Industrial & Commercial Bank of China climbed as much 2.5 per cent but closed just 0.6 per cent higher at HK$4.84.

HSBC rose by 0.9 per cent to HK$110.30. Li & Fung, a big supplier to Wal-Mart stores in the US, jumped by 6.5 per cent to HK$28.00.

Commodity prices lifted Australian shares. The S&P/ASX 200 gained 1.3 per cent to 5,608.10. BHP Billiton, the world’s biggest miner, rose by 3.0 per cent to A$36.91 and its takeover target, Rio Tinto, rose by 5.0 per cent to A$127.80.

Commonwealth Bank of Australia was caught in a bear squeeze, as investors who had sold short were forced to buy shares. CBA rose by 1.3 per cent to close at A$49.40.

Shares in Macquarie Fortress, which is managed by a Macquarie Bank-controlled entity, continued to slump, falling by 36.4 per cent to A$0.07, compared with its lifetime peak of $1.20 in July 2005. The investment company has had to sell securities holdings at a loss to meet debt covenants.

Macquarie, the investment bank, fell by 1.1 per cent to A$59.41.

In India, the Sensex was 0.4 per cent higher in mid-afternoon trading in Mumbai at 16,705. Reliance Power continued to fall after a disappointing debut following its $3bn initial public offering on Monday. It slumped a further 6.1 per cent to Rs349.95, compared with its offer price of Rs450.

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