Asian shares end mostly lower, Shanghai surges 3.1pc

SINGAPORE, Oct 9 (Dow Jones): Asian stock markets were mostly lower Friday, though Chinese stocks delivered their best percentage gain in more than four months as several resource shares jumped by the 10 per cent daily limit in response to a recent rally in commodities as trading resumed after the week-long Golden Week holiday.

News that Moody's Investors Service is reviewing China's government bond rating for a possible upgrade boosted sentiment and also helped Hong Kong stocks finish higher. Still, overall trading in the region reflected caution ahead of the key US jobs report due later in the global day.

"The bigger picture continues to be dominated by caution and profit-taking ahead of Friday night's key nonfarm payrolls release...Friday night's release has bigger implications than usual.

It should help settle any conjecture over both the necessity and size of any expanded quantitative easing programme," said IG Markets' market strategist Ben Potter.

Japan's Nikkei Stock Average fell 1.0 per cent to 9,588.88, Australia's S&P/ASX 200 dropped 0.2 per cent, South Korea's Kospi shed 0.2 per cent, Taiwan's Taiex gave up 0.5 per cent and Hong Kong's Hang Seng Index tacked on 0.3 per cent.

In afternoon trading, India's Sensex fell 0.5 per cent and Singapore's Straits Times Index gave up 0.3 per cent. Dow Jones Industrial Average futures were down 18 points in screen trade.
China's Shanghai Composite added 3.1 per cent for its biggest percentage gain since May 24, while the Shenzhen Composite index advanced 2.8 per cent.

In a statement, Moody's cited "the resilient performance of the Chinese economy following the onset of the global financial crisis, and expectations of continued strong growth over the medium term."

Metal and coal producers jumped off the blocks, helping overcome the early weakness displayed by property developers in the wake of further tightening measures introduced by the Shanghai municipal government Thursday.

"The Moody's move suggests global markets turn increasingly positive about China's medium-term fundamentals, so it's a big positive for commodities and related currencies," Bank of America-Merrill Lynch China economist Ting Lu wrote.

"This move will be positive for Chinese corporates, especially banks, as their ratings will be raised accordingly," Lu added.

Jiangxi Copper and Yanzhou Coal Mining jumped by the 10 per cent daily limit in Shanghai, while Yunnan Copper and Tongling Nonferrous Metals did the same in Shenzhen.

Zijin Mining surged 12.4 per cent in Hong Kong as trading resumed after the company disclosed a smaller-than-expected fine over a toxic chemical leak at one of its copper plants in early July.

Zijin had been suspended since Monday. The stock rose 10 per cent in Shanghai.

Mainland property developers underperformed the broad markets in China and fell in Hong Kong on news of the Shanghai housing-market tightening. Shimao Property gave up 1.7 per cent and China Overseas Land dropped 0.5 per cent in Hong Kong. China Vanke rose 0.5 per cent in Shenzhen, while Gemdale rose 0.9 per cent in Shanghai.
Chinese wind-turbine maker Xinjiang Goldwind Science & Technology rose on its debut in Hong Kong, finishing at HK$19.06 ($2.44), compared with its initial public offering (IPO) price of HK$17.98.

In Tokyo, the strong yen continued to weigh on the market. Investors were also reluctant to take large positions ahead of the long weekend. Japan will be closed for a national holiday Monday.

Exporters remained under selling pressure, with Toshiba falling 2.1 per cent and Toyota Motor dropping 2.0 per cent. Panasonic jumped 3.4 per cent on news it had withdrawn a shelf registration to issue up to 500 billion yen ($6.1 billion) in new shares.

Seven & I Holdings lost 3.7 per cent following the retailer's disappointing earnings and forecasts released Thursday.

In Sydney, shares of BHP Billiton ended 0.1 per cent higher and Rio Tinto ended little changed, overcoming early weakness after the Moody's report on China.

Shinhan Financial Group dropped 1.8 per cent in Seoul after the Seoul Economic Daily reported that the country's financial watchdog planned to impose heavy disciplinary measures on the chairman and several executives for violating financial transaction regulations.

Among other markets, New Zealand's NZX-50 fell 0.1 per cent and Philippine stocks gave up 0.2 per cent. By late afternoon, Indonesian shares declined 1.2 per cent and Thailand's SET Index gave up 0.7 per cent.

In foreign exchange markets, the US dollar was fetching Y82.33, from Y82.40 late in New York Thursday. The euro was at $1.3907 from $1.3912 and at Y114.50 from Y114.65.

"Looking ahead, the coming few days are jam-packed with event risk," said Mike Jones, currency strategist at the Bank of New Zealand. "Given the importance of the labour market to the US economic outlook, the US jobs data could have clear implications for whether the Fed is required to undertake additional monetary easing, and hence sentiment towards the US dollar," Jones said.
Finance ministers from the Group of Seven (G7) countries are also preparing to meet in Washington later, and traders expect some discussion on currency markets following recent sharp falls in the dollar and intervention by several countries to weaken their currencies.

"The global forex conundrum is morphing into a trade dilemma of sorts.

Investors need to stay bullish and hedged, in our opinion," said Richard Hastings, macro and consumer strategist at Global Hunter Securities.

Japanese government bond futures advanced, with lead December futures up 0.10 at 143.95 points and the 10-year JGB yield adding 0.5 basis point to 0.870 per cent.

Spot gold was at $1,343.90 per troy ounce, down $5.20 from Thursday's New York close. November Nymex crude oil futures were down 68 cents at $80.99 per barrel on Globex.