31 Oct 2008

Another volatile day for Asia-Pacific markets

9:49 pm on 31 October 2008

Shares in the Asia-Pacific region ended higher following another turbulent trading day.

Stocks in Asia dipped and headed for their biggest ever monthly fall, but optimism that a new round of interest rate cuts may revive a comatose global economy helped many indexes keep their largest weekly gains on record.

The Bank of Japan cut interest rates to 0.3% on Friday, its first rate cut it seven years, but the move was smaller than expected and came after a split vote. The yen rose while Nikkei average extended losses to close down 5% after the decision.

Oil prices dropped nearly $US2 a barrel after data on Thursday showed the US economy suffered its sharpest contraction in seven years in the third quarter, as consumers cut spending and businesses reduced investment.

Prices for base metals continued to slide, with Shanghai copper down a record 41% in October alone, on persistent concerns the global economy faces a potentially severe and long recession.

Policy makers have responded by cutting rates and injecting liquidity, as well as adopting unprecedented rescues of their banking sectors. After weeks of erosion in investor sentiment, some analysts are now wondering whether the worst might now be behind, at least for now.

The MSCI index of Asian stocks outside Japan fell 0.6%. The index is up 13% this week, its biggest weekly gain on record but is still down some 24% for the month and about 54% for the year.

Japan's Nikkei hit a 26-year low this week but rallied as much as 30% in a three-day surge to Thursday. Shares in South Korea gained 2.6%, while Taiwan surged 4%, and India added 7%.

Australia's benchmark index was 0.42% higher.

In New Zealand, the sharemarket was up 2.1% at the close of trade on Friday. Top stocks Fletcher Building was up 15 cents at $5.64, while Telecom was unchanged at $2.31.

Shares in Hong Kong and Shanghai fell amid profit-taking and concerns over earnings.