Asian markets ended mixed. Tokyo shares rebounded on bargain-hunting, but concern over China's economic outlook weighed on stocks in Shanghai and Hong Kong.
In Tokyo, the Nikkei 225 Stock Average rose 1.1% to 13165.45 in thin trading as investors covered short positions and bought back recent decliners across the board.
Shares of Mitsubishi UFJ climbed 3.1% and Sumitomo Mitsui Financial Group /zigman2/quotes/203656770/delayed JP:8316 +0.08% gained 2.8%. Among steelmakers, JFE Holdings /zigman2/quotes/204336633/delayed JP:5411 -0.18% jumped 4% and Sumitomo Metal Industries surged 6.5%. Komatsu /zigman2/quotes/204002437/delayed JP:6301 -0.74% rose 3.8% on expectations of rising demand for mining equipment in emerging countries.
Big-market-capitalization exporters also advanced, with TDK /zigman2/quotes/208948266/delayed JP:6762 -1.22% gaining 2.1% while Sony /zigman2/quotes/201361720/delayed JP:6758 -0.57% added 2.6%. Real estate shares rose after falling early last week in the wake of the failure of Urban. Monday, Mitsui Fudosan /zigman2/quotes/205394574/delayed JP:8801 -0.65% gained 2.2%.
Oil refiners performed well on the back of recent declines in crude-oil prices. Nippon Mining Holdingsgained 3.2% and Nippon Oiladded 1.9%. However, light, sweet crude for September delivery rose 56 cents to $114.33 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon after falling $1.24 on Friday to settle at $113.77 a barrel.
Meanwhile, China's Shanghai Composite Index, which tracks both Class A and Class B shares, tumbled 5.3% to 2319.87 on concern over the economic outlook. The index is now down 55.9% from the beginning of this year.
The broad-based decline came after local news reports said the China Insurance Regulatory Commission suggested at a recent work conference that insurers should be "extremely cautious" against the possibility of further declines in the stock market. Insurers slumped, with Ping An Insurance losing 2%, while China Life Insurance fell 2.9%. Citic Securities lost 8.7%.
Sentiment was also weakened by a lack of market-support measures from the government and the prospect of 11.9 billion previously nontradable shares of Baoshan Iron & Steel becoming tradable Tuesday. Baoshan Iron & Steel dropped 4.6%.
Airlines, which reported falling passenger traffic last month partly due to visa restrictions related to the Olympics, were among the biggest decliners. China Southern Airlines dropped 9.9% while rivals Air China and China Eastern Airlines fell by the 10% daily limit. The rebound in oil prices also hit refiners. PetroChina dropped 4% and China Petroleum & Chemical slumped 6%. Aluminum Corp. of China lost 8.8% and China Oilfield Services sank 7.9%.
China South Locomotive & Rolling Stock bucked the trend to end up 58.3% on its first day of trade. The company's shares rose on a strong earnings outlook supported by a rapidly expanding railway industry.
The weakness in mainland shares pulled Hong Kong's Hang Seng Index down 1.1% to close at 20930.67. Foxconn International /zigman2/quotes/205017351/delayed HK:2038 0.00% , the leading contract mobile-phone maker, sank 24% after issuing a profit warning last week. Chinese commodity producers were also hit, with China Coal /zigman2/quotes/201486584/delayed HK:1898 -0.37% dropping 4.33% while Angang Steel /zigman2/quotes/209338869/delayed HK:347 -1.81% fell 3.77%. Elsewhere, upstream producer CNOOC /zigman2/quotes/203421416/delayed HK:883 -0.33% lost 1.87%.
Property stocks declined after the local economy contracted on a quarter-to-quarter basis for the first time in five years. New World /zigman2/quotes/202357413/delayed HK:17 -1.38% lost 6.3% and Sino Land /zigman2/quotes/202960683/delayed HK:83 -1.47% ended 4.9% lower. Cheung Kong /zigman2/quotes/208405501/delayed HK:1 -0.79% fell 1.5%. Hong Kong's second-quarter GDP fell 1.4% from the first quarter, but it was still 4.2% higher than in the second quarter of 2007. Retail goods and textile exporter Li & Fung /zigman2/quotes/201795755/delayed HK:494 -1.41% lost 0.21% on worries about slumping demand overseas.
In Seoul, the Korea Composite Stock Price Index slipped 0.3% to 1567.71, weighed down by sluggish markets in China. Steelmakers gave up some of Friday's gains on profit-taking. Posco fell 1.4% and Hyundai Steel lost 1.4%.
Most shipbuilders struggled. Hyundai Heavy Industries dropped 0.5% and Hyundai Mipo Dockyard fell 0.6%. Daewoo Shipbuilding & Marine Engineering ended down 4.8%, partly due to news that Doosan Group has decided not to bid for the shipbuilder. Doosan Group said it will focus on its existing core businesses, sending shares of Doosan Heavy 2.3% higher. Doosan Infracore gained 3.1% and Doosan closed up 1.6%.
Builders outperformed the broad market on easing inflation worries after recent retreats in oil and commodity prices fanned expectations that the South Korean government may soon announce policies to boost the local economy. GS Engineering & Construction rose 4.7% and Daelim Industrial gained 2.6%.
In Australia, the benchmark S&P/ASX 200 consolidated in mixed trading to close up 3.3 points at 4985.0. BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP -0.78% gained 1.6% on short covering before announcing after the market close that net profit for the latest fiscal year rose 14.7% to a sixth-consecutive record high on higher prices and production volumes. (See related article.)
Among other commodities, Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -0.46% rose 0.5% and Fortescue /zigman2/quotes/202351558/delayed AU:FMG -1.23% gained 2%. Newcrest /zigman2/quotes/203840223/delayed AU:NCM +1.45% rose 0.6% as spot gold bounced to $800 after hitting a nine-month low of $773.45 on Friday.
Elsewhere, Pakistan's benchmark KSE-100 Index jumped 3.8% to 10643.86 points minutes after President Pervez Musharraf announced he would resign. The index was recently up 4.5% at 10719.62. (See related article.)
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