Asia stocks muted as Japan factory output falls

PAMELA SAMPSON AP Business Writer Published:

BANGKOK (AP) -- Asia's major stock markets were mostly lower Friday as nervous investors turned their focus to China after digesting a report showing a slowdown in Japanese industrial production.

Benchmark oil rose above $103 per barrel after diving the day before to a six-week low. The dollar fell against the euro and the yen.

Sentiment in stock markets was hurt by news that Japan's factory production fell a worse-than-expected 1.2 percent in February -- its first decline in three months -- as demand for exports weakened.

There was also nervousness ahead of the release Sunday of an official gauge of China's manufacturing known as the Purchasing Managers Index. A smaller private sector index released earlier this month showed that manufacturing had continued to contract.

Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong, said he expected to see a modest decline in China's manufacturing for March.

"This will sustain concerns over whether China's landing remains soft," he said, as opposed to an abrupt, hard landing that would jolt the global economy.

The Nikkei 225 index in Tokyo fell 0.4 percent to 10,073.75.

Hong Kong's Hang Seng fell 0.8 percent to 20,448.97, stung by a sharp sell-off in shares of Sun Hung Kai Properties. Its stock plummeted 11.5 percent after Thomas and Raymond Kwok, the two billionaire brothers who run the territory's biggest property developer, were arrested in a corruption probe along with a former senior government official.

South Korea's Kospi index was little changed at 2,014.44. Mainland Chinese shares were mixed and Australia's S&P/ASX 200 rose 0.1 percent to 4,342.30.

Jackson Wong, vice president at Tanrich Securities in Hong Kong, said some of the market downdraft could be attributed to selling by traders trying to tidy up their portfolios as the quarter ends.

"They unload their underperforming stocks, especially the ones with scandals," he said. "Some second or third tier stocks are being sold off a lot. They don't want to show clients that they hold these kinds of stocks."

Lesser markets fared better, with benchmarks in Singapore, Taiwan, and Indonesia rising.

Meanwhile, Hong Kong-listed Industrial & Commercial Bank of China, the country's biggest state-owned lender, jumped 1.8 percent after saying its 2011 profit increased 26.2 percent despite a slowing economy and government lending controls.

On Thursday, European markets were pummeled as workers took to the streets of Spain to protest spending cuts. The government is expected to announce massive spending cuts and tax hikes to prevent a disabling debt crisis like the one that forced Greece to plead for staggering bailouts.

Wall Street ended mixed after a session of choppy trading. The Dow Jones industrial average closed up 0.2 percent at 13,145.82. The Standard & Poor's 500 added 0.2 percent to 1,403.28. The Nasdaq composite index ceded 0.3 percent to 3,095.36.

Benchmark oil for May delivery was up 68 cents to $103.46 per barrel in electronic trading on the New York Mercantile Exchange. On Thursday, the contract plunged $2.63 to $102.78 after French Prime Minister Francois Fillon said there's a "good chance" that the U.S. and Europe will agree to release some of their oil reserves.

In currency trading, the euro rose to $1.3354 from $1.3287 late Thursday in New York. The dollar fell to 81.99 yen from 82.40 yen.

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