= Asian Shares Higher; Mazda Motor Drives Gains In Tokyo

Mon. October 05, 2009; Posted: 08:56 PM

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian equity markets were higher on Tuesday, inspired by solid gains for U.S. stocks. In Japan, Mazda Motor Corp. surged after it upgraded its earnings outlook.

But the rises in Asia were not as large as the Dow Jones Industrial Average's 1.2% gain Monday. "Wall Street's rally doesn't mean the correction in U.S. stocks is over," said Yumi Nishimura at Daiwa Securities SMBC.

She added that the Japanese market was watching for third quarter earnings reports from Alcoa and other big U.S. firms later this week. "After recent sharp declines, Japanese stocks, particularly financials, may see some bargain-hunting...but still, traders need to assess earnings before pushing the market higher."

Japan's Nikkei 225 was up 0.2%, South Korea's Kospi Composite was up 0.1% and New Zealand's NZX-50 gained 0.5%. DJIA futures were up one point in screen trade.

The Australian market was outperforming the region, with the S&P/ASX 200 up 0.8%, with gains in large mining and financial stocks leading a dual-pronged advance on the bourse.

"The U.S. had a strong run so we're back on board...metals prices were quite strong overnight so there's a strong push through the big miners and the banks are taking a bit of a run," said Lucinda Chan of Macquarie Equities.

All the major Australian banks higher after Goldman Sachs upgraded its view on large U.S. banks to Attractive from Neutral ahead of quarterly earnings. Commonwealth Bank of Australia was up 1.3%, ANZ was up 1.2% and National Australia Bank was up 1.1%.

Among miners, BHP Billiton was up 1.7% and Rio Tinto gained 1.9% while Newcrest Mining was up 2.1%.

In Tokyo, financial stocks were leading the broader market higher with Nomura Holdings up 2.9%, Daiwa Securities Group up 3.2% and Mizuho Financial Group up 2.8%.

Mazda Motor surged 7.6%, bouncing after the shares tumbled about 20% over the past seven sessions. Investors were cheered after the company Monday said it expected a net loss of Y26 billion for the fiscal year ending March, from its previous expectation of a Y50 billion loss. The company also announced that it plans to raise about $1 billion, partly to develop technologies that will improve the fuel-efficiency of its cars.

Korean technology stocks were higher, after Samsung Electronics said it now expects consolidated third-quarter sales of KRW36 trillion, compared with KRW30.3 trillion a year ago, and an operating profit of KRW4.1 trillion from KRW1.48 trillion a year earlier.

"Samsung Electronics' outlook looks good, but the guidance was in line with expectations, not providing a (positive) surprise that Samsung gave in the second quarter," said Lee Kyoung-min at Woori Investment & Securities. But he added: "Overall sentiment is not that bullish now due to a mixed bag of U.S. economic data and signs of a slowing pace of recovery for the local economy. The Kospi is expected to undergo a correction until the gap between expectations and reality narrows." Samsung Electronics was up 0.9% and LG Electronics gained 3.6%.

New Zealand shares were helped by data showing business confidence soared to a decade high in the third quarter, but the strong local dollar was hurting exporters. Auckland Airport was up 1.0% and retailer The Warehouse gained 1.7% though Fisher & Paykel Healthcare fell 0.9%.

In foreign exchange markets, the majors were trading in tight ranges with the euro at $1.4659 from $1.4651 in late New York trade on Monday, and at Y131.08 from Y131.19. The U.S. dollar was at Y89.45 from Y89.54.

The New Zealand dollar hit 14-month highs against the U.S. dollar, helped by improved risk appetite as well as a report showing strong business confidence in the third quarter.

The New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion showed a net 36% of surveyed firms expect general conditions to improve over the next six months versus a net 25% expecting a deterioration in the second quarter. That was the strongest outcome in a decade, evidence the economy is pulling out of recession.

The survey validated the view that the Reserve Bank of New Zealand will start lifting the official cash rate "towards something closer to neutral (likely over 5%) from March next year i.e. six months earlier than previously anticipated," said UBS Senior Economist Robin Clements.

The New Zealand dollar was at US$0.7295, after hitting a 14-month high of US$0.7315.

Japanese government bonds were held back by the rise in the Tokyo stock market. The lead December JGB futures contract was off 0.01 at 139.49 points. The 10-year cash JGB yield was flat at 1.260%. The market was also supported by expectations that the sale of Y2.1 trillion worth of 10-year JGBs later would confirm start-of-quarter demand.

The London Metals Exchange three-month copper futures contract was at $6,020 per /ton, up $105 from the London afternoon kerb. LME three-month aluminum was also higher, trading at $1,812 per ton, up $22.

The November Nymex crude oil futures contract was up 5 cents at $70.46 per barrel. Spot gold was at $1,016.40 per troy ounce, down 80 cents from the New York close.

-Colin Ng, Dow Jones Newswires; +65-6415-4140; colin.ng@dowjones.com

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(END) Dow Jones Newswires

10-05-09 2056ET

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