Asian Shares Mostly Lower; Japanese Chip Stocks Surge

SINGAPORE -- Asian shares were mostly lower Thursday, weighed by losses on Wall Street. But the Tokyo stock market was higher led by chip stocks as investors returned from an extended break.

Results from the Federal Reserve's policy meeting were largely in line with expectations, so Asian investors were taking their cue from the fall in U.S. stocks. The Industrial Average lost 0.8% even though the Fed indicated a rosier outlook for the economy.

"The performance of the U.S. markets overnight didn't look good, and is likely to raise concern that U.S. markets may be very near their peaks," said Y.S. Rhoo at Hyundai Securities in Seoul.

Australia's ASX/S&P 500 was down 0.3%, South Korea's Kospi Composite was down 0.1% and New Zealand's NZX-50 was 0.2% lower. Japan's Nikkei 225 was 1.8% higher as that market returned from a five-day weekend. The DJIA futures contract was 15 points lower in screen trade.

Japanese stocks were lifted by the chip sector with investors cheered by Intel Corp. CEO Paul Otellini's upbeat comments earlier in the week. He said he expects PC unit sales for the year to end their declines and be "flat to slightly" higher.

Tokyo Electron was up 1.4%, Toshiba was up 2.3% and Elpida was up 3.6%.

Japan Airlines was down 10.5% on uncertainty over the ailing carrier's efforts to restructure itself. A person familiar with the matter said the company will consider a breakup along with a range of other options, as the airline faces pressure from lenders and the government to turn around its operations, the Wall Street Journal reported Wednesday.

Aiful was down 27% after the consumer lender said it was preparing to apply for debt reorganization procedures mediated by a third party. The company also said it now expects a group net loss of Y311 billion for the current fiscal year, compared with its previous forecast for a Y8.12 billion profit.

In Australia, resources stocks were the biggest drag, after base metals prices fell Wednesday. BHP Billiton was down 1.1% and Rio Tinto lost 1.3%.

Trade in Ten Network shares was suspended before the broadcaster said that Canada's CanWest Global Communications Corp., planned to sell down its 50.1% stake. A person familiar with the matter told Dow Jones Newswires that bids were being taken at A$1.30 per share. The shares were last traded before suspension at A$1.37.

Korean exporters were weighing on that market with sentiment in the sector hurt by the strong won. Samsung Electronics was down 0.9% and Hynix was down 1.4%.

In foreign exchange markets, the euro was lower after the Fed's statement, largely due to profit-taking after its strong run recently.

"The market must realize that U.S. monetary policy is like the biggest oil tanker. The Fed is now executing a turn," said ANZ Bank senior dealer Alex Sinton. Wednesday's statement "clearly says things are picking up...that's sounding a foghorn."

Sinton added that the market had taken aggressive short positions on the U.S. dollar and "I suspect there are more people looking to take profits than say a week ago."

The euro was at $1.4735 from $1.4740 in late New York trade Wednesday, and at Y134.51 from Y134.64. The dollar was at Y91.27 from Y91.32.

Japanese government bonds were higher; Mitsubishi UFJ Securities strategist Naomi Hasegawa said U.S. Treasurys advanced during the Japanese 5-day weekend, so "there may be some catch-up buying to do." The lead December futures was up 0.16 at 138.70 points while the 10-year cash bond yield was down two basis points at 1.32%.

Spot gold was at $1,010.40 per troy ounce, up $2.20 from the New York close. "On balance, the FOMC rate decision and statement were gold-friendly, with one important caveat. The statement estimated that long-term inflation will remain subdued; a low inflation climate is historically negative for gold prices," said HSBC analyst James Steel.

HSBC expects the U.S. dollar to remain weak, based on the view that U.S. interest rates will remain low through 2010. "Should the U.S. dollar remain on the defensive, gold is likely to be well-supported in the longer term," Steel added.

The three-month London Metals Exchange copper futures contract was at $6,146 per ton, up $20 from the London kerb on Wednesday. Three-month aluminum was flat at $1,873 per ton.

The November Nymex crude oil futures contract was down 58 cents at $68.57 per barrel, extending its $2.79 loss on Wednesday.