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Dec 19, 2008

Tokyo Stocks Decline Ahead of Rate Decision

Most Asian markets dropped Friday after U.S. stocks declined and crude-oil prices suffered steep losses overnight, with Japanese shares losing ground after a tentative start as investors awaited the Bank of Japan's decision on interest rates.

Shares of Toyota dropped in Tokyo on report it may post an operating loss during the current financial year, while HSBC Holdings extended losses in Hong Kong on speculation the banking giant may raise capital.

The Nikkei 225 Average fell 0.7% to 8603.56 in the afternoon, while the broader Topix index dropped 0.2% to 836.69, after moving in a range around break-even in early trading.

The volatility came ahead of the outcome of a decision on interest rates by the Bank of Japan after a two-day meeting, with the central bank widely expected to expand liquidity-boosting steps or even cut interest rates for the second time this year.

Credit-Suisse analysts wrote in a report the market was pricing in a chance of a rate cut by the Bank of Japan to 0.15% from 0.3%. "Any rate cut from an already low level will be taken by the market as largely a symbolic move."

In Hong Kong, the Hang Seng Index dropped 1.9% to 15208.68 and the Hang Seng China Enterprises Index gave up 1.1% to 8459.75.

Steve Cheng, associate director at Shenyin Wanguo in Hong Kong, said in spite of the day's losses, the market seemed "very resilient, as we are getting a lot of support" from Chinese shares traded in Hong Kong.

"The reason might be that people are still expecting more measures from China, especially something like a cut in interest rates or bank reserve ratio. This happens before every weekend, but this time it seems more likely," said Cheng.

Australia's S&P/ASX 200 was recently down 0.3% at 3570.70 and South Korea's Kospi rose 0.3% to 1179.82, while New Zealand's NZX 50 index lost 0.9% to 2684.39.

China's Shanghai Composite rose 0.1% to 2018 and Taiwan's Taiex gave up 1.3% to 4635.85. Singapore's Straits Times Index shed 0.4% to 1792.14.

In Tokyo, shares of Toyota dropped 1.2% after the Nikkei business daily reported the automobile giant was likely to post its first-ever operating loss during the year ending March 31 on plunging worldwide sales.

Hong Kong stocks were weighed down as market heavyweight HSBC Holdings tumbled 4.5%, on top of Thursday's 3.4% decline, on market speculation it may raise capital.

Energy-related stocks dropped across the region, with Woodside Petroleum slumping 6.7% and BHP Billiton dropping 3.6% in Sydney, while Inpex tumbled 6.9% in Tokyo trading.

January crude-oil futures slipped as much as seven cents to $36.15 a barrel in electronic trading, after sliding 9.6%, or $3.84, to $36.22 a barrel Thursday on the New York Mercantile Exchange.

In Asian currency trading, the U.S. dollar changed hands for 89.16 yen, compared 89.20 yen Thursday.

Source : WallStreetJournal
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