Asian stocks fluctuated as escalating tensions on the Korean peninsula tempered gains after Europe agreed to a bailout for Ireland.
BHP Billiton, the world's largest mining company and Australia's No. 1 oil producer, retreated 0.6 per cent in Sydney as mounting concern over Korean tensions drove oil and metal prices lower. Korea Exchange Bank slumped 4.6 per cent in Seoul as South Korea's president said patience only invites more provocation from North Korea. Sony, Japan's biggest exporter of consumer electronics, rose 2.2 per cent in Tokyo after European government officials threw debt-strapped Ireland a lifeline and Nomura rated the stock a “buy.”
“Global thematics are driving markets right now,” said Jason Teh, who helps manage about $US2.6 billion at Investors Mutual in Sydney. “You've got the Irish bailout on the one hand and, meanwhile, the threat of war on the other side of the world, which is causing jitters. Any optimism also gets harder to price in with the market being more expensive after recent rallies.”
The MSCI Asia Pacific Index was little changed at 129.05 in Tokyo, with about the same number of stocks gaining as falling. Japan's Nikkei 225 Stock Average advanced 0.3 per cent. Australia's S&P/ASX 200 Index fell 0.3 per cent and New Zealand's NZX 50 Index slipped 0.3 per cent in Wellington.
Korean tensions
Futures on the Standard & Poor's 500 Index gained 0.3 per cent. The index lost 0.8 per cent on Nov. 26 in New York as a stronger dollar weighed on commodity prices and banks declined amid mounting concern about Europe and North Korea. Markets were open for half a day following the Thanksgiving holiday.
European government officials, meeting yesterday in Brussels, threw Ireland an 85 billion-euro ($US113 billion) lifeline and scaled back proposals to saddle bondholders with losses in future budget crises, seeking to reverse the market selloff menacing the euro.
South Korea's President Lee Myung Bak said in a televised national address today that he would build up South Korea's military and make North Korea pay for any more provocations.
North Korea “will deal a merciless military counter-attack at any provocative act of intruding into its territorial waters,” according to a Rodong newspaper commentary carried on Nov. 28 by the North's official Korean Central News Agency. U.S. and South Korean warships led by the aircraft carrier USS George Washington have begun four days of drills in the region.
Oil, metals
BHP Billiton, Australia's biggest oil producer, lost 0.6 per cent to $42.96 in Sydney and Rio Tinto Group, the world's third-largest mining company, dropped 0.8 per cent to $83.35.
Crude oil for January delivery slipped 10 cents to settle at $83.76 a barrel in New York on Nov. 26. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum declined 1.3 per cent that day.
Korea Exchange Bank slumped 4.6 per cent to 11,350 won in Seoul. GS Engineering & Construction, a South Korean builder, sank 3.3 per cent to 98,600 won.
The MSCI Asia Pacific Index climbed 7 per cent this year to Nov. 26, compared with gains of 6.7 per cent by the S&P 500 and 5 per cent by the Stoxx Europe 600 Index. Stocks in the Asian gauge are valued at 14.2 times estimated earnings on average, compared with 14 times for the S&P 500 and 11.9 times for the Stoxx 600.
Sony rose 2.2 per cent to 2951 yen. Nissan, which is Japan's third-largest automaker by sales and gets about 75 per cent of its sales abroad, climbed 1.3 per cent to 795 yen in Tokyo. Bridgestone, the world's largest tyremaker, gained 1.6 per cent to 1544 yen.
The yen depreciated to 84.19 against the dollar today in Tokyo, matching its level in New York on Nov. 26 and the lowest level since Sept. 28. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.