Currency jitters rock Japanese stocks

CURRENCY jitters have been rattling Japanese stocks periodically for several months now as the yen continues its steady gains against the dollar. The fears are understandable: in the middle of the year the greenback fetched about 119 yen; nowadays it commands less than 110.

But Tokyo is not the only market where such concerns have been getting a regular airing. In Australia the local dollar has also been strengthening markedly against its US counterpart, tugged higher by signs that the economy is in fine fettle and interest rate rises may now be round the corner.

Such factors were apparent in Sydney on Monday, casting a shadow over those firms that earn a substantial portion of their net income from overseas markets. With the Aussie dollar edging close to six-year peaks of 70.5 US cents, the All Ordinaries index softened 13.60 points or 0.41% to close at 3268.80.

Leading the drop was mining giant BHP Billiton, which slipped 22 cents or 1.9% to A$11.50. Sector peer Rio Tinto was also a loser, shedding 26 cents or 0.9% to A$35.39. The pair have been pumped up in recent sessions on hopes for surging commodity prices, a global recovery, and booming China demand.

Media conglomerate News Corporation, which makes the bulk of its earnings in the United States, dropped three cents or 0.2% to A$12.52.

Foreign exchange analysts say they would not be surprised to see Australian rates pushed up a notch by the end of the year. Such a belief was strengthened today with the release of robust retail sales figures.

In Singapore, banks stood out after decent quarterly figures inspired hopes that better times were in store.

DBS Group, the State-linked lender, shot 70 cents or 4.9% higher to S$15, while there was a more modest advance for its family-run rival United Overseas Bank, which gained 10 cents or 0.7% to S$13.70. Oversea Chinese Banking Corporation, the third local lender, traded at S$12.30, 20 cents or 1.6% better. Singapore Airlines flew higher on prospects for a continued-bounce back from the Sars crisis-earlier this year. It added 10 cents or 0.8% to S$12.20. The Straits Times index marched 27.48 points or 1.6% higher to 1751.19.

Hong Kong shares also registered solid gains, bolstered by further signs that growth is picking up. The latest purchasing managers' survey puts the growth rate at its best in three and a half years.

HSBC, the global lender, benefited from the upswing, adding HK$1 or 0.8% to HK$118. Analysts have suggested its next buy may come in Korea, where several banks are on the block.

Bank of East Asia rose 10 cents or 0.4% to HK$23.30, while Hang Seng Bank put on HK$1.50 or 1.4% to HK$98.50. The Hang Seng index firmed 110.87 points or 0.9% to 12,300.97.

South Korean carmaker Hyundai Motor rose 600 won or 1.5% to 40,050 on rosy export data, helping the Seoul Composite to strengthen 9.31 points or 1.2% to 791.67.

Chipmaker Hynix Semiconductor soared 310 won or 4.1% to 7840 as the British government reportedly backed away from a plan for punitive tariffs on some Hynix output.

Japanese markets were closed on Monday for a national holiday.