Far East investors lose their nerve

ASIAN euphoria continued to evaporate today, leaving main markets mixed after they slipped back from recent highs as investors began to worry that recent rises were too far ahead of events.

The US Federal Reserve's latest warning that the American economy was still soft, with increasing job losses and slower output, added to the earlier disappointment over consumer confidence data.

Further evidence of Japan's decline was provided by figures showing industrial production last month fell by 0.3% to its lowest in 13 years. Analysts' reports suggesting the US economy will not start to recover until late next year depressed investors who had piled into regional markets on hopes of an early recovery.

With main markets showing gains of up to 30% since the post-11 September slump, most sellers were happy to pocket gains and wait for some stronger signals of revival. The collapse of a rescue bid for the US energy trader Enron, which rendered its shares virtually worthless in New York yesterday, hit the stocks of Japanese companies exposed to the group, dragging the Nikkei 225 Average down, although it recovered to close 31.15 points up at 10,655.96.

Tokyo's third-largest broker, Nikko Cordial, which has invested heavily in Enron bonds, saw its own stock slump by 7%, sending shockwaves through the rest of the financial sector. Investors were also standing back ahead of Friday‘s listing of Dentsu, the country's largest advertising agency. A relatively low valuation compared with international agencies, and its domination of the local advertising industry is expected to provide a strong attraction to Japanese and foreign investors.

Big exporters and computer-related stocks were hit by the Fed report, Canon and NEC both down by 4% and Sony off 3%. The Enron effect was also felt in Hong Kong, where worries about the quality of US loan books saw shares in HSBC Holdings slip 25 cents to HK$93, while the Hang Seng index lost 69.94 points to 10,996.25. Hong Kong investors were also cautious ahead of GDP figures due tomorrow that are expected to show that the economy shrank by 2.2% year on year in September, confirming that the territory had joined Taiwan and Singapore in an official recession.

South Korean stocks failed to sustain a rally coming from airline and hotel stocks expected to benefit from the country co-hosting the football World Cup next year. The Kospi index was down 3.16 points at 628.86. Early falls in Taiwan among technology stocks following a weak overnight performance on Nasdaq encouraged enough optimistic stock-picking to lift the Weighted Average 18.25 points to 4465 . 83 . Domestically driven Singapore stocks fell on concerns over the economy, taking the Straits Times index down 21.01 points to 1455.52.

Sydney stocks continued to fall, the All Ordinaries index down 23.2 points at 3267.5. Some excitement was provided by Normandy Mining, which jumped 5% on a revised offer from AngloGold of South Africa. In mixed trading, Malaysia's Kuala Lumpur Composite index slipped 0.12 points to 640.94, while the SET index in Thailand was up 3.32 points to 296.3. Indonesia's Jakarta Composite index lost 1.88 points to 381.02 after the arrest of fugitive businessman Tommy Suharto, son of the former President.

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