Asian stocks advance but economic worries linger

[March 10, 2009]  HONG KONG (AP) -- Most Asian stock markets climbed Tuesday, with oil companies gaining on the back of stronger crude prices, but Japanese shares sank to a new 26-year closing low amid ongoing worries about the economic crisis.

Hong Kong stocks led the region's advance as reeling banking giant HSBC rebounded after the government said it was probing a massive drop in the company's shares the day before. Other Asian banking shares, punished of late as the world financial sector struggles to raise more capital to make up for crippling losses, also moved higher.

Rises across the region followed Europe but ran counter to the U.S., where Wall Street continued to skid on fears about the depth of the recession in the world's largest economy.

But Tuesday's gains were taken by analysts as a fleeting move upward in a larger bear market, with investors still on edge about the global economy and the financial sector. The region's stocks have fallen along with world equity markets in recent weeks as investors were shaken by the possibility that the magnitude of the slowdown in Asia's export-dependent economies is far greater than expected.

The toll on Asia from contracting industrialized countries was underscored by more signs of distress in China Tuesday. Consumer prices fell last month for the first time in more than six years, suggesting a weakening economy and overcapacity in industry. The government also warned of another depressed month for exports.

"Investors are getting a sense that we're really in worse shape than we originally thought," said Andrew Orchard, Asian strategist for Royal Bank of Scotland in Hong Kong. "People are losing heart that there might not be an effective response and quick recovery."

Japan's Nikkei 225 stock average fell 31.05 points, or 0.4 percent, to 7,054.98 -- the lowest closing level since Oct. 6, 1982 when the index finished at 6,974.35. Markets in Malaysia and the Philippines also were lower.

In Hong Kong, the Hang Seng added 349.47, or 3.1 percent, to 11,694.05, lifted by a 13.9 percent recovery in HSBC after its 24 percent tumble on Monday.

South Korea's Kospi added 1.9 percent to 1,092.20, while Shanghai's benchmark advanced 1.9 percent. Australian and Singapore benchmarks also rose.

Overnight in New York, a $41 billion merger between drugmakers Merck & Co. and Schering-Plough failed to generate much enthusiasm among investors fixated on the worst recession in decades.

The Dow fell 79.89, or 1.2 percent, to 6,547.05. The Standard & Poor's 500 index lost 6.85, or 1 percent, to 676.53, while the Nasdaq composite index fell 25.21, or 2 percent, to 1,268.64.

U.S. futures pointed to gains on Wall Street. Dow futures rose 88 points, or 1.4 percent, to 6,616 and S&P500 futures were up 11.3, or 1.7 percent, to 687.20.

The pharmaceutical deal was also a damp squib for Asian pharma stocks. In Tokyo, Astellas Pharma Inc. lost 4.3 percent and Eisai Co. shed 6 percent. Takeda Pharmaceutical Co., Japan's largest drug manufacturer, lost 3.9 percent, extending losses after saying Friday that a key diabetes drug faced U.S. regulatory delays.

Among the best performers in Asia were oil issues. Chines upstream producer CNOOC jumped 6.7 percent in Hong Kong. Australia's Woodside Petroleum Ltd., the country's No. 2 oil company, gained 3.2 percent.

After another swing higher overnight, oil prices eased lower in Asian trade. Benchmark crude for April delivery fell 27 cents to $46.81. On Monday, the contract rose $1.55 to settle at $47.07 a barrel on the New York Mercantile Exchange as investors anticipated another OPEC production cut.

In currencies, the dollar fell to 98.38 yen from 98.90 yen. The euro was higher at $1.2710 from 1.2606.

[Associated Press; By JEREMIAH MARQUEZ]

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