Asia stocks mixed on weaker yen, China fears

Asian stocks began the week mixed on Monday, with Wall Street’s strong performance providing support and Japanese exporters helped by a weaker yen, but worries about China hitting Shanghai and Hong Kong.

Tokyo’s Nikkei index rose 0.38 percent by lunch and Sydney’s S&P/ASX 200 index was up 0.51 percent in the afternoon, but Hong Kong’s Hang Seng fell 0.34 percent by the break and Shanghai dropped 0.50 percent.

In Japan, Honda Motor was among the exporters gaining strongly, as it raised its outlook for US sales this year to 13.1 million vehicles compared with an earlier projection of 12.8 million.

Kenichi Hirano, operating officer at Tachibana Securities, said gains by US stocks last week as well as an improvement in the euro and dollar against the yen were helping.

In addition, worries about rising inflation in some other markets might be giving Tokyo an advantage, he told Dow Jones Newswires.

“Some funds are flowing into Japanese shares out of emerging markets on concerns over tightening measures,” said Hirano.

However, fears that China will hike interest rates again to tame strong inflation, possibly early next month, continued to weigh on many markets.

“There might be some technical rebound on the way but we’re still likely to be pressured by fears of more rate hikes; that’s the main thing that’s ongoing right now and has been for the last two trading days,” said Gabriel Gan, a senior equities officer at AmFraser in Singapore.

Traders generally were looking ahead to a meeting of the US Federal

Reserve’s policy committee on Tuesday and Wednesday for signs of any change in US stimulus measures. The meeting will be followed by US growth data on Friday.

Gains tailed off at the end of last week on Wall Street as worries emerged about personnel changes at Apple and Google, but the Dow closed 0.7 percent higher than the previous Friday.

The euro slipped against the dollar in Asian trade as investors took profits following a steep rise fuelled by growing optimism about Europe, dealers said.

The unit drifted lower to $1.3601 in Tokyo from $1.3611 in New York late Friday, after rising as high as 1.3648. The single European currency fetched 112.47 yen compared with 112.43.

In rangebound trading, the dollar edged up to 82.69 yen from 82.60 yen.

The euro fell due to profit-taking orders by Asian hedge funds and account-settling by Japanese exporters, FXOnline Japan senior strategist Soichiro Mori said.

On oil markets, New York’s main contract, light sweet crude for March delivery, rose 27 cents to $89.38 per barrel. Brent North Sea crude for March was up 28 cents at $97.88.

Gold opened at $1,347.00-$1, 3480.00 an ounce in Hong Kong, unchanged from its Friday closing price.