Asian Shares End Dn;Yen Strength Remains Burden On Tokyo Mkt

SINGAPORE -- Asian stock markets ended lower Monday, tracking Wall Street's weak showing on Friday, with Japanese exporters hit hard by the yen's continued strength against the U.S. dollar.

The Nikkei 225 Average fell 2.5% to 10009.52 after briefly slipping below the psychologically important 10000 point level during the session for the first time since July.

The spotlight was on the rising Japanese yen. The dollar fell hard against the yen in early Asia trade due to a growing view that U.S interest rates will remain low for longer than expected, but the currency later recovered some of its losses on a slight modification by Japanese Finance Minister Hirohisa Fujii to his pro-strong-yen stance.

The U.S. dollar was buying 89.36 yen, down from 89.76 yen late in New York trade on Friday after hitting 88.23 yen earlier, an eight-month low.

The dollar rose back to a high of 89.60 yen in the afternoon Asian session as Fujii slightly changed his remarks about the government stance toward recent yen movement.

Early Monday, the finance minister said the recent dollar/yen trend is "not abnormal," suggesting the government won't step into the market to curb the yen's rise. But later in the day, Fujii toned down his pro-strong-yen rhetoric in a seminar, saying that "The temporary movements (in the yen against the dollar) at present are a little one-sided."

"I've never said I will leave alone rises in the yen," Fujii said, adding that his opposition to any competition by countries to devalue their currencies to get an edge in international trade "has, before I knew it, been interpreted to mean that I'm endorsing yen rises, but I've never said such a thing."

Still, many traders said Fujii's fine-tuning of his earlier remarks does not alter his basic stance of non-intervention, and would not likely buoy the greenback much further. "The afternoon comments were as expected, as of course the Japanese finance minister would not be foolish enough to overtly advocate yen strength," said Yuji Saito, head of the foreign exchange group at Societe Generale.

Among exporters, Honda Motor fell 5%, Toyota Motor lost 3.8% and Sharp shed 4.1%.

The market was pricing in the risk of weaker-than-expected earnings due to the stronger yen, said Phoenix Securities manager Mamoru Nakajo. "Earnings at Japanese companies will be bad, with exports hurt by the yen's strength and domestic businesses also struggling amid deflation."

Chinese stocks tumbled on concerns new listings on the Nasdaq-style Growth Enterprise Market may divert attention from the main board and sap liquidity. The Shanghai Composite lost 2.7% to 2763.53, with Hong Kong's Hang Seng Index shrinking 2.1% to 20588.41 and Taiwan's Taiex losing 0.8%.

South Korea's Kospi dropped 0.9%, Australia's S&P/ASX 200 gave up 0.8% and the Philippines' main index lost 1.3% after tropical storm Ketsana dropped the heaviest rain in more than 40 years on Manila and neighboring areas of Luzon island on Saturday. The Philippine government said Monday it couldn't cope with massive flooding that has displaced nearly half a million people.

In afternoon trading, Singapore's Straits Times Index fell 1.2%. Indian markets were shut for a public holiday.

Industrial Average futures were recently 5 points higher in screen trade after the DJIA closed down 0.4% on Friday on weaker-than-expected housing and durable good orders data.

Adding to the selling pressure in Tokyo, financials also dropped sharply on continued concerns over dilutive equity financing. Nomura Holdings shrank 5.8% in heavy volume, extending its sharp losses Friday after announcing a new share issue. Sumitomo Mitsui Financial Group dropped 4.3%, Mitsubishi UFJ Financial Group fell 1.8% and Mizuho Financial Group lost 2.3%.

Resource stocks fell across the region on weakness in commodity prices, with gold miners falling especially hard as the metal extended its fall below $1,000 a troy ounce. Spot gold was recently 20 cents higher at $990.90, while November crude-oil prices gave up 35 cents to $65.67 a barrel on Globex.

Newcrest Mining tumbled 5.4% and Woodside Petroleum declined 1.2% in Sydney, with PetroChina falling 2.9% in Hong Kong and 1.8% in Shanghai. Among gold miners, Zhaojin Mining Industry lost 4.8% and Zijin Mining Group lost 3% in Hong Kong, while Zhongjin Gold skidded 5.8% in Shanghai.

In Hong Kong, shares of China Unicom (Hong Kong) fell 5% after South Korea's SK Telecom said it will sell its 3.8% stake in Unicom back to the company for $1.28 billion to improve its financial position and expand its convergence business in China.

In other foreign exchange trading, the euro was hit by increased risk aversion, and touched a two-month low of 129.82 yen. It was recently at 130.77 yen from 131.72 yen in late New York trade on Friday. The euro was at $1.4635, from $1.4672. The British pound continued its recent sell-down against the greenback. Sterling was recently buying $1.5876, compared with $1.5932 on Friday.

Lead December Japanese government bond futures rose, tracking gains in U.S. Treasurys on Friday and weakness in Tokyo shares. The contract was up 0.27 at 139.31 points. The 10-year cash bond yield was down 3.0 basis points at 1.280%.