Debt-dogged banks tighten leash

STRONG signals from President George Bush and Prime Minister Tony Blair that fingers are not yet ready to squeeze triggers over Iraq helped to ease market tension in Asia. But North Korea's threats continued to overshadow the region.

Early gains in Tokyo and Hong Kong were offset by retreats in other markets, which failed to respond to a powerful overnight session on Wall Street. After hanging on to meagre rises in morning trade, Japan's Nikkei 225 closed 14.53 points lower at 8678.44 as pressure remained on debt-laden banking stocks ahead of next month's reporting season.

A global cash-raising exercise by Sumitomo Mitsui again deterred investors in the ordinary shares, which slid a further 3%. The shares have tumbled almost 20% as investors fret their earnings will be diluted by the massive preferred stock issue now under way. These concerns were confirmed when the bank promised to offer supporters of the new issue extra stock if the price drops by the time of conversion into ordinary shares in June 2005.

Worries over Sumitomo proved contagious. Shares in the world's biggest lender, Mizuho Holdings, dived more than 5%, while fourth-largest Japanese lender UFJ's stock plunged almost 8%.

Tech stocks throughout the region were hurt by the cloudy outlook for chip sales this year. The latest semiconductor book-to-bill ratio from the US indicated that demand is falling fast, threatening to hurt prices and profits. Japanese suppliers of chip-making equipment Advantest, down 2%, and Tokyo Electron, off almost 3%, suffered as a result.

Hong Kong's Hang Seng index edged up 30.6 points to 9427.6, helped by a near 2% rise by garment exporter Li & Fung. Buyers moved in on the territory's biggest trading company after bullish earnings from Abercrombie and Fitch - the Hong Kong group is a major supplier to America's favourite preppy fashion label. Locally-quoted Standard Chartered Bank shares drifted down 25 cents to HK$82.25 ahead of full-year figures due after the market close. Analysts have pencilled in a rise of around 7%, but all eyes will be on its bad-debt and credit card provisions, which are rising ominously throughout Hong Kong.

A mixed morning in Sydney left the All Ordinaries index up 35.8 points at 2864.7 as News Corp shares bounced on Wall Street's strength. Resource stocks also firmed on the receding threat of immediate war in the Middle East.

South Korean stocks failed to maintain early momentum inspired by government support, and the Kospi slid 0.51 to 602.94, while Taiwan's Weighted Average retreated a second day, down 54.48 points to 4550.83.

Markets in Thailand and Malaysia remained unharmed by their continued black-listing by giant US pension fund Calpers. The SET index in Bangkok added 1.60 points to 372.05 and the Kuala Lumpur Composite rose 2.02 points to 659.47. Singapore's Straits Times index added 21.7 points to 1315.5, but the Jakarta Composite in Indonesia shaded 0.41 to 402.54.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.