Bank bid talk galvanises Tokyo

THE slide in American consumer confidence spread to Asian investors today, as they also nervously awaited today's gross domestic product figures for the US.

Banks provided much of what regional action there was, and were being driven in different directions by domestic and international issues.

The world's largest bank, Japan's Mizuho Holdings, galvanised the sector in Tokyo on reports that it was preparing a US$2.5bn (£1.7bn) capital-raising exercise to boost a balance sheet hollowed out by bad debts. Other banks followed on hopes that this would be the start of a general mobilisation against bad debts, but their relative strength was not enough to enliven the wider market.

The impact of poor US consumer confidence added to apprehension about the outlook for electronics exporters, and the Nikkei 225 Average lost 146.18 points to close at 10,366.34 in slack business.

Trading in Hong Kong was dominated by deals in HSBC Holdings, which fell by a dollar to HK$84, and the Hang Seng index was pulled down below 10,000 with a loss of 84.84 points to 9991.59.

HSBC was hit by concern over its exposure to an Argentinian debt default after a threatened downgrading of the country's credit rating, although Hong Kong banking analyst Roy Ramos of Goldman Sachs said that even a total write-off of the bank's US$6.4 billion exposure to Argentina, which was unlikely, would have minimal effect on earnings.

Other Hong Kong banks rose after fifth largest lender Citic Ka Wah was suspended, sparking speculation that it was about to make a bid for the smaller Hongkong Chinese Bank, where deals were also frozen. In Singapore, DBS Bank, the country's largest lender, fell almost 2% on fears that demand would be slashed by the slowing economy. The Straits Times index lost 13.38 points at 1369.98. Local electronics shares were mixed after Nasdaq's overnight slide.

Taiwan's Weighted Average index slipped 35.05 points to 3880.56 as falls in electronic stocks reversed early gains. Chip giant Winbond tumbled almost 4% after it joined the list of regional electronics groups reporting slumping quarterly earnings.

South Korea's market was a shade higher as buyers came in for troubled

Hynix Semiconductor, which jumped 10% ahead of a creditors' meeting today.

Although other technology stocks drifted down on concerns abut US demand, the Kospi index managed to advance 0.96 points to 534.83. Earnings fears continued to eat away medium-term gains in Australian resources stocks, which dragged the All Ordinaries index down by 2.1 points to a close of 3185.3. Big metals and minerals miners BHP Billiton and Rio Tinto were down by as much as 2%, but Goldfields went the other way, adding almost 3% after reporting third-quarter results that were better than expected, boosted by some judicious bullion trading.

Further dumping of blue-chips took Malaysian stocks down for the fifth day running, with the SET index moving below the 600 support level with a 4.34 points fall to 598.85. In Thailand the SET index was up by 0.62 points at 274.22, and Indonesia's Jakarta Composite gained 1.73 points to 380.1.