By Ilya Garger
Asian-Pacific stocks closed mostly lower Monday after an increase in Chinese interest rates raised the possibility of slower growth in a key market and manufacturing base for regional firms.
Fujitsu /zigman2/quotes/208459594/delayed JP:6702 +0.83% , Honda Motor /zigman2/quotes/200490352/delayed JP:7267 -0.85% and Nikon /zigman2/quotes/203281219/delayed JP:7731 -1.43% were all down more than 2% after China said Friday -- after markets closed -- that it was raising its benchmark one-year loan and deposit rates by 0.27 percentage point. China's move to raise interest rates was the latest in a series of measures to rein in surging investment, which has been fueled in part by foreign companies. (See related article.)
The Nikkei 225 Average finished the day down 0.85% at 15969.04. It was the first sub-16,000 close for the index since last Tuesday. Hong Kong's Hang Seng Index closed 1.86% lower at 17007.88, South Korea's Kospi Index fell 0.71% to 1321.67, and Taipei ended 3.20% lower at 6505.92. On the other hand, the benchmark Shanghai Composite Index rose 0.2% to finish at 1601.15 after an early fall, and Australia's S&P/ASX 200 closed 0.22% higher at 5063.60.
The Chinese yuan gained on expectations that higher interest rates may attract more foreign funds, bonds weakened on forecasts that a further interest-rate rise is possible while stock-market participants viewed last week's action as possibly the last in the latest round of tightening measures.
In Tokyo, telecom giant Nippon Telegraph & Telephone /zigman2/quotes/200718273/delayed JP:9432 -1.35% lost 2.2%. Softbank /zigman2/quotes/207303954/delayed JP:9984 +2.55% fell 1.1% after giving back morning gains. According to media reports, it plans to offer a cellphone-based social networking service starting this fall. It is the first Japanese mobile carrier to offer this type of service, according to reports. Japan's dominant mobile carrier, NTT DoCoMo /zigman2/quotes/202061250/delayed JP:9437 -0.79% , decreased 1.7%.
Daiwa Securities Group /zigman2/quotes/201391978/delayed JP:8601 -0.27% , Japan's second-largest broker, fell 3.7%. It posted strong gains last week on expectations that transaction volumes will pick up in the wake of the Nikkei's recent strong performance. Rakuten, Japan's top online shopping-mall operator, dropped 6.6% after its earnings fell short of some analysts' forecasts. Bridgestone /zigman2/quotes/205589013/delayed JP:5108 -1.09% , Japan's larger tire maker, lost 1.5%.
Bucking the trend, Fuji Photo Film rose 2.9%. The company said Friday it plans to establish an LCD-manufacturing joint venture in Shanghai.
In Hong Kong, mainland Chinese banks including Bank of China /zigman2/quotes/204682472/delayed HK:3988 +4.64% lost ground on concerns the rate increase would reduce lending. Bank of China decreased as much as 0.9%. Hang Lung Properties fell as much as 4.1%.
Mainland developers fell sharply after the rate rise, with China Overseas Land & Investment /zigman2/quotes/205731176/delayed HK:688 +5.48% dropped as much as 5.7%. China Mobile lost as much as 3.4% as investors took profit on the stock, which had gained more than 20% in the past two months. Last week, the world's largest mobile carrier posted strong earnings in line with expectations. (See related article.)
In Taipei, shares ended sharply lower on an opposition-led campaign for a protest in September to oust President Chen Shui-bian.
In Seoul, shares closed lower on foreign and institutional selling following last week's gains, as the market took its cue from weakness in Japanese and Taiwanese stocks. Technology shares fell on investors' profit-taking. LG Philips LCD fell 2% and Hynix Semiconductor lost 1.2%. Samsung Electronics ended 0.2% lower. Automobile makers, which have a positive earnings outlook for the second half, outperformed compared with the broader index. Hyundai Motor fell 0.3% and Kia Motors ended flat.
Large capital shares fell on foreign and institutional selling. Kookmin Bank lost 1.9% and SK Telecom fell 2.6%. However, Shinhan Financial Group gained 1% after the company announced it has offered more than $7.5 billion to acquire 85% of LG Card. (See related article.)
Bucking the trend, China's shares ended higher, despite last week's rise in benchmark interest rates. The Chinese yuan hit a post-revaluation high, bond prices dropped sharply but stock prices recovered early losses as investors reacted to the surprise interest-rate rise. Chinese stocks were led by companies that will likely benefit from third-generation mobile phone licenses when they are awarded. Telecommunications equipment maker ZTE rose 3.8%, and Datang Telecom Technology surged by the 10% daily limit.
In Sydney, Miner BHP Billiton /zigman2/quotes/201448516/delayed AU:BHP +1.15% gained 0.9% after striking workers at its Escondida copper mine in Chile rejected the company's offer of a 4% pay raise plus bonus. BHP reports earnings later this week. (See related article.)
Telecom firm Telstra eased 3.3% after lowering its full-year earnings forecast but confirming its ordinary dividend. (See related article.)
-- Dow Jones Newswires contributed to this article.
Write to Ilya Garger at email@example.com