Asia stocks muted after poor German debt auction

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Asia stocks muted after poor German debt auction

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Asian stock markets edged higher Thursday as speculation that China might ease its monetary policy.

24 November,2011 11:22 am

Asian stock markets edged higher Thursday as speculation that China might ease its monetary policy soothed fears that the German economy Europes strongest may be succumbing to the continents debt crisis.Benchmark oil hovered above $96 per barrel while the dollar fell against the euro and the yen.Hong Kongs Hang Seng posted a 0.4 percent gain at 17,934.22. South Koreas Kospi rose 0.8 percent to 1,797.68. Benchmarks in Singapore, mainland China and Taiwan also rose.Japans Nikkei 225, reopening after a one-day public holiday, fell 1.3 percent to 8,208.47. Australias S&P/ASX 200 slipped 0.2 percent to 4,044.20. Shares in India, Malaysia and Indonesia also fell.Speculation that Chinas central bank was aiming to ease its tight monetary policy helped spur a wave of buying in Hong Kong, analysts said. But the official Xinhua News Agency said Thursday the move lowering reserve requirements for six rural banks in eastern Zhejiang was administrative rather than a policy shift. The banks reserve requirements had been raised a year earlier after they failed to lend enough to farming businesses.There have been signs that Chinas campaign of interest rate hikes and credit controls to tame stubbornly high inflation has been working, giving it leeway to ease monetary policy as the world economy stumbles.The positive catalyst today is the expectation that the China tightening cycle might loosen, said Jackson Wong, vice president at Tanrich Securities in Hong Kong. I do think the rebound is pretty short term.The chatter over Beijings monetary policy helped push up Chinese banking shares. Hong Kong-listed Agricultural Bank of China Ltd. jumped 3.3 percent and Industrial & Commercial Bank of China, the countrys biggest commercial lender, rose 1.9 percent.But heavy industrial shares, which are closely tied to economic growth, fell as worries about a global economic slowdown grew. Japans Komatsu Ltd., a world leader in construction machinery, lost 3.8 percent. India Tatas Steel fell 2.6 percent.Global markets were spooked Wednesday by the poor results at an auction of German debt, which met with only 60 percent demand. Germanys Financial Agency blamed the extraordinarily nervous market environment.The weak buying suggests that Europes crisis might be infecting strong nations that are crucial to keeping the euro currency afloat. Germany bears much of the burden of bailing out weaker neighbors such as Greece and Portugal.Analysts at Credit Agricole CIB said the European debt crisis remains the major concern for the markets and that the German debt auction signals the spread of the contagion to hard core economies in the region.Borrowing costs for Italy and Spain rose from levels that already were considered dangerously high. Europe lacks the resources to bail out those countries, its third- and fourth-biggest economies.In the U.S., the government released a mixed batch of economic reports. Slightly more people applied for unemployment benefits last week, a sign that layoffs continue.Consumer spending was sluggish but incomes rose a bit more than expected. Orders for long-lasting manufactured products fell for a second month and business investment dropped off.The Dow fell 2.1 percent to close at 11,257.55. The Standard & Poors 500 index fell 2.2 percent to 1,161.79. The Nasdaq fell 2.4 percent to 2,460.08.U.S. markets will be closed on Thursday for the Thanksgiving holiday and will have shortened hours on Friday.Benchmark crude for January delivery was up 37 cents at $96.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.84 to settle at $96.17 in New York on Wednesday.In currency trading, the euro rose to $1.3373 from $1.3326 late Wednesday in New York. The dollar dropped to 77.09 yen from 77.35 yen.