Asia off early lows in choppy session

Japanese, Korean and Australian stocks traded off their worst levels Tuesday, as investors appeared to temporarily look past the debt worries that have recently gripped markets to pick up shares in selected firms.

Japan’s Nikkei Stock Average JP:NIK -0.13 percent traded flat, South Korea’s Kospi KR:0100 +0.50 percent rose 0.4 percent, and the Australian S&P/ASX 200 index AU:XJO -0.28 percent slipped 0.5 percent.

In early, volatile trading, Hong Kong’s Hang Seng Index HK:HSI -0.02 percent lost 0.1 percent, while the Shanghai Composite index CN:000001 -0.26 percent slipped 0.6 percent.

Japan, Korea and Australia markets posted early losses after US stocks fell sharply on Monday, with the Dow Jones Industrial Average DJIA -2.11 percent moving into negative territory for 2011.

The Wall Street drop came as members of a special US debt-cutting committee confirmed Monday that they had failed to reach a bipartisan deal to reduce the budget deficit. Read more on US share market action..

The committee couldn’t agree on how to cut the US debt pile by $1.2 trillion over 10 years, with the result that automatic spending cuts are now slated to take effect in 2013.

“The failure of the US budget supercommittee to come up with a deficit reduction plan, coupled with concerns over France’s AAA status kept risk under pressure,” said strategists at BNP Paribas.

Monday saw 10-year French government bond yields tick higher, and Moody’s Investor Services warned that rising French borrowing costs and an uncertain outlook posed an ongoing threat for the country’s AAA credit rating. See report on threat to French debt rating.

Investors pulled out of commodities in regular New York trading on Monday, weighing on Asia-Pacific listed miners on Tuesday. Read more on gold.

Rio Tinto Ltd shares AU:RIO -1.90 percent RIO -0.86 percent were down 2.4 percent in Australia, while Sumitomo Metal Industries Ltd JP:5405 -0.81 percent SMMLF 0.00 percent dropped 0.8 percent in Japan.

However, selected oil firms were putting in a better performance, with JX Holdings Inc. JP:5020 +0.86 percent JXHGF 0.00 percent up 1.1 percent in Japan, while China Petroleum & Chemical Corp., or Sinopec, HK:386 +2.25 percent SNP +0.27 percent, rose 1.4 percent in Hong Kong.

The dollar USDJPY +0.24 percent moved above the 77-yen mark, easing pressure on export-sector profits. As a result, Japanese auto makers were gaining, with Honda Motor Co. JP:7267 +1.58 percent HMC -0.13 percent up 2 percent, and Nissan Motor Co. JP:7201 +1.99 percent NSANY -4.36 percent up 1.8 percent.

Hyundai Motor Co. HYMTF +5.00 percent climbed 2.3 percent in South Korea.

Central Japan Railway Co. JP:9022 -5.07 percent fell 5.2 percent after the firm agreed to bear the cost of building stations for its magnetic levitation train line, according to a Nikkei report. The cost of building six stations was estimated at JPY 590 billion ($7.7 billion), according to the report. -By Sarah Turner

 

Category: Stocks