Asian shares close mostly higher; Tokyo recovers on yen fall

Asian shares close mostly higher; Tokyo recovers on yen fall

	Published : Thu, 08 Mar 2007 08:58 By : Agencies Print this Story

HONG KONG (XFN-ASIA) - Shares across the Asia-Pacific region closed mostly higher, with Tokyo rising on the yen's decline and China's markets benefiting from fund inflows, dealers said.

Tokyo shares recovered from early losses to close broadly higher as the yen's steep decline encouraged conjecture in the market that the unwinding of yen carry trades may have run out of steam, dealers said.

Relieved that the unwinding of carry trades -- in which money is borrowed here at low interest rates and invested in higher-yielding assets abroad -- may no longer drive up the yen, investors snapped up shares, sending the Nikkei 225 Stock Average above 17,000 points for the first time in four sessions.

The Nikkei closed 325.69 points or 1.94 pct higher at 17,090.31, its high for the day.

The TOPIX index of all first-section issues gained 31.36 points or 1.86 pct to settle at its own high for the day of 1,720.96.

Tatsuo Kurokawa, a strategist at Japan Asia Securities, said: 'Aggressive short-covering on the Nikkei futures emerged on the back of the yen's fall, and this prompted a greater variety of investors to rush to buy, across all sectors.'

Australian shares closed relatively unchanged as investors adopted a cautious approach after two days of solid gains, dealers said.

They said investors began the trading session weighing on the major bank and resource stocks before resilience in the wider market reversed most of these earlier losses.

Dealers said investors are likely to maintain their wariness until the sell-off in global equity markets is seen as coming to an end and unlikely to trap over-enthusiastic buying. The market is expected to remain flat tomorrow ahead of the key US non-farm payrolls report.

The S&P/ASX 200 slipped 3.0 points or just 0.05 pct at 5,822.3, with the key index closing off the day's low of 5,774.6.

Hong Kong shares had posted a strong recovery in afternoon trade as investors picked up stocks such as Swire Pacific and Bank of Communications ahead of results announcements, dealers said.

They said the market also took a lead from China's A-share bourses which gained after the government's draft corporate income tax law set a unified tax rate of 25 pct for foreign and domestic firms, resulting in a tax cut for Chinese firms.

At 3.30 pm the Hang Seng Index was up 205.89 points or 1.09 pct at 19,124.53.

In mainland China, A-shares in Shanghai and Shenzhen closed higher on fresh fund inflows and a stronger yuan, with metals and property stocks in demand, dealers said.

The Shanghai A-share Index was up 33.07 points or 1.09 pct at 3,076.24 and the Shenzhen A-share Index was up 13.80 points or 1.76 pct at 796.54.

'Fresh money has been flowing in due to a strong yuan and newly-issued stock investment fund products by the fund management firms,' said Xu Ming, an analyst at Shiji Investment.

Seoul shares finished higher for a third day, with triple witching resulting in only limited program selling as the Bank of Korea's decision to keep rates steady provided further clarity on the outlook, dealers said.

Initial sentiment was cautious following Wall Street's weaker close but the market turned around in tandem with the rally in Tokyo, with investors cheering the BoK's continuing optimism on the economic outlook and improved consumer confidence data for February, they added.

The KOSPI index closed up 12.94 points or 0.92 pct at 1,423.89, off a low of 1,408.34 and a high of 1,433.15.