By V. Phani Kumar, Colin Ng and Matthew Allen
HONG KONG (MarketWatch) -- Asian markets finished on either side of break-even after a choppy session Thursday. Exporters forced a retreat in Tokyo for the first time in six sessions.
Energy stocks such as Cnooc /zigman2/quotes/204964401/composite CEO -1.27% /zigman2/quotes/202960683/delayed HK:83 0.00% led the Hong Kong market higher as trading resumed after Wednesday's holiday and as crude-oil prices settled above $77 a barrel in New York. But Chinese shares declined, failing to latch on to early gains, as the market reopened for the first time this week after a public holiday.
Sentiment was muted and trading volumes were weak in some markets. Stocks were also pressured as investors locked in some of the strong recent gains after a larger-than-expected drop in U.S. housing starts and on concerns over Spanish debt problems.
"None of us had expected a fast recovery for the U.S. housing market... European debt troubles will likely remain as a risk for some time, but we are getting less sensitive to these problems," said SK Securities's Won Jong-hyuck in Seoul.
Japan's Nikkei Stock Average and Australia's S&P/ASX 200 gave up 0.7% each, South Korea's Kospi rose 0.2%, China's Shanghai Composite fell 0.4%, Taiwan's Taiex gained 0.8% and Hong Kong's Hang Seng Index added 0.4%.
In afternoon trade, India's Sensex added 0.3% and Singapore's Straits Times Index lost 0.3%. Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.58% futures declined 30 points in screen trade.
Japanese stocks fell on profit-taking in exporters' stocks, spurred by the yen's gains against the U.S. dollar and the euro. Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.14% dropped 2.8% and Canon /zigman2/quotes/210242912/composite CAJ -0.82% /zigman2/quotes/207639533/delayed JP:7751 -0.03% shed 1.6%.
Consumer finance firm Takefuji Corp. surged 6% on a Nikkei report that it had enough funds for the redemption of 41.4 billion yen ($454 million) in convertible bonds. Among its peers, Acom and Promise gained were up 2.1% and 4.9%, respectively.
"It just shows how much short positions were accumulated on the back of bankruptcy fears" ahead of a stricter money lending law scheduled to take effect Friday, said Tsuyoshi Segawa, Mizuho Securities equity strategist.
Toshiba Corp. /zigman2/quotes/204149068/delayed TOSYY -0.02% /zigman2/quotes/205628942/delayed JP:6502 +0.54% rose 0.8% and Fujitsu /zigman2/quotes/208783738/delayed FJTSY +0.18% added 1% on news the two firms have agreed to merge their mobile phone operations. The venture will be the second largest player in Japan's handset market.
Mitsui & Co. /zigman2/quotes/205346820/delayed JP:8031 +0.30% /zigman2/quotes/206658933/delayed MITSY -0.38% gained 2.2%, after BP agreed to put $20 billion in an independently-administered escrow fund to help pay for damage claims stemming from the Gulf oil spill and said it wouldn't issue further dividends this year, lifting some uncertainty. The trading house has a 10% stake in the troubled oil drilling operations.
Shares in Shanghai reversed early gains as investors fretted over the sustainability of China's robust growth. "Higher-than-expected growth in May exports has been factored in, but we aren't sure whether such strong momentum is sustainable," said Amy Lin at Capital Securities. She added that July exports data may show a negative impact from the European crisis.
Pharmaceutical companies were leading losses on continued profit-taking. Jiangzhong Pharmaceutical /zigman2/quotes/204348100/delayed CN:600750 -2.20% slumped 7% and Harbin Pharmaceutical /zigman2/quotes/202194507/delayed CN:600664 +2.27% sank 8.9%. Despite the day's fall, Jiangzhong is up more than 40% in the year to date, while Harbin is up nearly 10%.
In Hong Kong, blue-chip Henderson Land Development /zigman2/quotes/200560946/delayed HLDCY -0.06% /zigman2/quotes/208724890/delayed HK:12 -0.27% fell 2.3% after the firm Tuesday said it will book a loss of 734 million Hong Kong dollars ($94 million) in the first-half of this year from the cancellation of sales at a luxury residential project.
Tencent Holdings /zigman2/quotes/204605823/delayed HK:700 +0.05% /zigman2/quotes/202617460/delayed TCTZF -1.80% dropped 1.9%, on fears of a slowdown in the online gaming segment. Goldman Sachs analysts cut their target price for the stock to HK$152 from HK$180.
But Cnooc jumped 2.3% and PetroChina /zigman2/quotes/204979431/delayed HK:857 0.00% /zigman2/quotes/205108732/composite PTR -1.60% inched up 0.1% on an overnight rally in crude-oil prices. July Nymex crude-oil futures were down 74 cents at $76.93 per barrel on Globex.
In Sydney, Leighton Holdings /zigman2/quotes/206629268/delayed LGTHF +10.55% climbed 2.2% on news it's won 1.5 billion Australian dollars ($1.29 billion) worth of contracts.
In Seoul, airline and automobile stocks led gains amid hopes for solid earnings this year. Kia Motors /zigman2/quotes/205439169/delayed KIMTF 0.00% climbed 0.8% and Asiana Airlines spiked 6.8%.
Shipbuilders got a boost form news flows on order wins, with Hyundai Mipo Dockyard rising 1.5% after securing a 338 billion won ($279 million) bulk ship order from Europe.
Elsewhere, New Zealand's NZX 50 lost 0.7% and Philippine shares rose 0.2%. Thailand's SET Index rose 0.3% and Indonesian shares climbed 0.5% by late afternoon.
Spanish business daily El Economista reported Wednesday that the International Monetary Fund, the European Union and the U.S. Treasury had drawn up a liquidity plan for Spain, including a credit line of between €200 billion and €250 billion. Both Madrid and the EU Commission denied the report but the denial didn't douse concerns that markets could yet be roiled by any bad news out of Europe.
Lead Japanese government bond futures gained 0.13 to 140.41 points. The yield on the benchmark 10-year JGB was down one basis point at 1.225%.
Spot gold was at $1,232.50 per troy ounce, up $2 from late New York Wednesday.