Asian Shares Slip; Wesfarmers Hit By Competition Fear

SINGAPORE -- Asian stock markets were mostly a little lower on Tuesday, with investors looking for fresh cues after U.S. stocks closed on an ambivalent note. In Australia, Wesfarmers was hard hit by news of potential competition.

"Domestic investors are not that optimistic," said Kazuhiro Miyake, chief strategist at Daiwa Institute of Research in Tokyo; "Although there are signs of improvement in the global economy and corporate earnings, the question is whether or not it will last," and investors were closely watching U.S. economic indicators.

Japan's Nikkei 255 was down 0.5% while South Korea's Kospi Composite fell 0.2% and Australia's S&P/ASX 200 eased 0.4%. New Zealand's NZX-50 inched up 0.2%.

The Dow Jones Industrial Average closed Monday just 0.03% higher, turning lower late in the session, while the Nasdaq Composite eased 0.1% and the S&P 500 inched 0.05% lower. The DJIA futures contract was last 13 points lower in screen trade. In Australia, Wesfarmers was down 7.5% on news of a joint venture between Lowes and Woolworths to develop home improvement stores. The stores would be fresh competition for Wesfarmers' Bunnings Hardware division. Wesfarmers was also trading ex-dividend.

Mirvac Group was down 0.4% after the property developer posted a full-year net loss of A$1.08 billion in the year ended June 30 on writedowns of property revaluations, its share in associates and joint ventures and non-cash items.

Australian miners were little changed, with BHP up 0.2% while Rio Tinto was flat. But they were vulnerable despite commodity price gains on Monday, said RBS institutional trader James Trude. "There's still concern that China might be pulling back on restocking" metals, he said. "People are just a little unsure on that, so that are being conservative about pushing resource equities too far too fast."

Japanese shares were lower on profit-taking with Toyota was down 0.7%, Olympus down 1.6% and Inpex down 1.1%. Korean investors were also in profit-taking mode after Monday's gains with KB Financial down 3.0% and Samsung Electronics down 0.6%.

In New Zealand, Vector was up 1.0% after posting above-expectations results while Pike River was down 8.8% after reporting sharply higher full-year losses and a delay in exports.

In foreign exchange markets, the U.S. dollar and the euro were both lower against the yen, weighed by Japanese exporters selling to settle their accounts.

The U.S. dollar was at Y94.20, from Y94.52 in New York Monday, while the euro was at $1.4289 from $1.4299 and at Y134.59 from Y135.15.

Markets were cool to news that Israel's central bank Monday raised its key interest rate to 0.75% from 0.5%, responding to signs the economy had started growing and to fears that inflation may pick up quickly.

Though it was the first central bank to raise interest rates amid signs the worst for the global economy was over, investors considered the move an anomaly and it was not bringing forward expectations of policy tightening in the region.

Japanese government bonds were higher after U.S. Treasurys gained on Monday with the lead September futures contract up 0.15 point at 139.06 points.

Base metals were mostly lower, in reaction to the consolidation for stock markets across the region. LME copper was at $6,330 a ton, down $95 from the London kerb, while LME aluminum at $1,910, down $17. LME lead was at $2,000, down $25. Spot gold was at $944.10 per troy ounce, up $1.90 from the New York close.

The October Nymex crude oil futures contract was down 43 cents at $73.94 per barrel.