UPDATE: Asian Shares Mostly Lower; Japan's Chip Stocks Surge

SINGAPORE -- Asian shares were mostly lower Thursday, weighed by losses on Wall Street and declines in resources stocks. 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 Dow Jones 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 0.8%, South Korea's Kospi Composite was down 1.6% and Hong Kong's Hang Seng Index lost 2.9%, while the Shanghai Composite shed 1.4%. Japan's Nikkei 225 was 1.1% higher as that market returned from a five-day weekend. The DJIA futures contract was 24 points lower in screen trade.

Bucking much of the region, 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 4.8%, Toshiba was up 3.8% and Elpida was up 5.6%.

Around the region, resources stocks dragged on indexes after base metals prices fell Wednesday. In Australia, BHP Billiton was down 1.5% and Rio Tinto lost 1.4%. Jiangxi Copper's Hong Kong-listed shares fell 2.9%, while its mainland shares lost 3.8%. In Korea, Posco shed 2.3% and Taiwan's China Steel fell 0.3%.

Japan Airlines was down 11.1% 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 11.1% 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.

Metallurgical Corp. of China struggled in its debut on the Hong Kong market, trading at HK$5.54, 12.6% below its initial public offering price. Conita Hung, Head of Equity Markets at Delta Asia Financial, said the stock's Hong Kong IPO price translated to around 26 times forecast 2009 earnings.

"The sentiment is not supportive to the debut. I think the IPO price was a bit pricey," said Hung, who expects the stock to trade between HK$5.30 and HK$6.00 in the near term.

Singapore's Noble Group added 8.7% as it resumed trade after Tuesday's news that sovereign wealth fund China Investment Corp. bought a 14.9% stake in the company for US$850 million. "We view CIC's investment positively as it cements Noble's presence in China, where tremendous growth potential exists, and paves the way for more investment opportunities," Nomura said in a report.

Among other regional markets, Taiwan's Taiex lost 0.7%, New Zealand's NZX-50 was flat, Singapore's Straits Times Index slipped 0.3%, Malaysia's KLCI traded flat and Philippine shares shed 0.3%. Indonesian shares added 0.9%.

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 $1.4714 from $1.4740 in late New York trade Wednesday, and at Y134.01 from Y134.64. The dollar was at Y91.04 from Y91.32.

There was some caution ahead of the G-20 summit in Pittsburg on Thursday and Friday. Players were watching if participants made any comments on the foreign exchange levels.

Eurasia Group expected the impact of the summit to be limited. "With twenty-plus states, all with different domestic interests, and without an enforcement mechanism, the G-20 is unlikely to agree to much beyond weakly worded agreements-in-principle."

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 0.13 at 138.68 points while the 10-year cash bond yield was down two basis points at 1.32%.

Spot gold was at $1,009.20 per troy ounce, up $1.00 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.

The three-month London Metals Exchange copper futures contract was at $6,095 per ton, down $31 from the London kerb on Wednesday. Three-month aluminum traded at $1,869 per ton, down $4 since Wednesday's kerb.

The November Nymex crude oil futures contract was down 49 cents at $68.48 per barrel, extending its $2.79 loss on Wednesday.