Asian Shares End Lower; Shipping Stocks Take Big Hit

SINGAPORE -- Most Asian share markets ended lower Wednesday as shipping stocks and shipbuilders fell on worries about the strength of the global economic recovery.

Japan's Nikkei 225 Average ended down 1.4% at 10075.05, with Australia's S&P/ASX 200 down 1.4% and South Korea's Kospi Composite losing 2.4%. The Shanghai Composite Index, which lost 2.8% in the previous trading session, rose 0.3%, but Taiwan's Taiex gave up 1.6% and Hong Kong's Hang Seng Index lost 1.8%.

Ping An Securities analyst Li Xianming said investors still harbored concerns that markets might run out of positive catalysts. "We're particularly worried about the U.S. economy because there may be ugly surprises as it rebounds."

A Wall Street Journal report that GMAC Financial Services and the Treasury Department were in advanced talks to prop up the lender with its third helping of taxpayer money was adding to the cautious tone, serving as a reminder of how some battered financial firms remain dependent on government lifelines. Dow Jones Industrial Average futures were recently 32 points lower in screen trade.

India's Sensex fell 0.4% and Singapore's Straits Times Index shed 1.7%.

Shares of Honda Motor defied a downbeat Tokyo market to jump 3.3% after lifting its earnings forecast. The car maker's net profit sank 56% in the fiscal second quarter but it lifted its earnings forecast for this fiscal year, predicting its profits would grow as cost-reduction efforts pay off.

Shipping stocks and shipbuilders were sharply lower, amid recent downbeat earnings for the sector, which has taken a hammering from the global downturn. The Baltic Dry Index, a measure of the demand for dry bulk goods, fell 1% Tuesday.

Mitsui O.S.K. Lines dropped 2.2% and Kawasaki Kisen Kaisha slid 4.5% in Tokyo. STX Pan Ocean plunged 7.4% and Daewoo Shipbuilding lost 3.9% in Seoul, China Cosco Holdings gave up 3.8% in Hong Kong and Neptune Orient Lines fell 3.5% in Singapore trading.

Although Chinese shares ended higher, trading volumes were thin on concerns that Friday's launch of ChiNext, the new Nasdaq-style board, would have a negative impact on liquidity.

"I expect tens of billions of funds to channel into ChiNext. Many of these investors have higher risk appetite and make frequent trades. Their departure may have a sizable impact on the main board's trade volume," said Haitong Securities analyst Zhang Qi. Industrial & Commercial Bank of China slipped 0.6%, while China Life Insurance Co. dropped 0.7%.

Shares of National Australia Bank fell 2.8% in Sydney in line with the regional markets, although the lender posted a better-than-expected profit for the year ended Sept. 30. Telstra gained 1.5% after confirming its full-year earnings guidance.

In Hong Kong, Aluminum Corp. of China Ltd., or Chalco, dropped 2.7% despite saying Tuesday it returned to a net profit in the third quarter, as the results were well-flagged.

Local developers were the biggest underperformers in Hong Kong after Financial Secretary John Tsang told developers at a meeting Tuesday the government may intervene in the property market if necessary to protect people's livelihoods and consumers' interests, according to a person who attended the meeting. Sino Land fell 4.6%, after Tuesday's 5.4% loss.

In Mumbai, banking stocks declined for a second day in a row after the Reserve Bank of India said banks would be required to raise their provisions. ICICI Bank sank 3.7%, while State bank of India dropped 0.6%.

In foreign-exchange trade, the euro was recently buying $1.4793, compared with $1.4802 in New York. Against the Japanese yen, it was buying 134.57 yen from 135.88 yen. The U.S. dollar was fetching 90.97 yen, from 91.82 yen.

The broad gains of late in the U.S. dollar were unlikely to last, said ICAP Economist Adam Carr. "Free money and low yields are driving the greenback into the ground and, of course, providing a great platform for risk trades in general. I don't see that changing in the near term."

The Australian dollar dropped after data showed the country's consumer price index rose 1% in the third quarter. The currency was recently at $0.9049, from $0.9209 level earlier.

Analysts said the data solidified the case for a quarter-point interest rate increase by the Reserve Bank of Australia next week, but wasn't enough to justify a half-percentage-point move. "The trend in inflation remains down, so inflation worrywarts can cool their jets for another several months at least. The RBA will hike by 25 basis points again, to 3.5%. I'd be gobsmacked by any other decision," said Macquarie Debt Markets Interest Rate Strategist, Rory Robertson.

Japanese government bond futures were down 0.19 at 137.67 points, with the 10-year note yield rising 2 basis points to a two-month high of 1.420%.

Spot gold was down $4.35 from New York, at $1,035.25 per troy ounce. Nymex front-month crude oil futures were down 53 cents at $79.02 a barrel on Globex, having risen 87 cents in New York.