Greenspan cheer for Japanese

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Greenspan's forecasts of a mild recovery in the US economy this year got the biggest play in Japan, but other markets were alarmed by his rider that the rebound would be mild, leading to a late decline on Wall Street.

A forecast by Japanese manufacturing companies that production this month will jump nearly 5% also sustained the recent rally and the Nikkei 224 Average rose for the third day, but failed to hold its best levels and closed 14.74 points up at 10,587.83.

Investors also held back ahead of the Bank of Japan's policy meeting, which stated that it would expand money supply by increasing its purchases of government bonds in support of Prime Minister Junichiro Koizumi's deflation strategy.

Bank stocks responded strongly after Koizumi failed to rule out a government financed bailout, and Mizuho Holdings led the sector with a 3.7% gain. Technical factors also played a part as a tightening of short selling forced some heavy bear covering by foreign institutions.

A 1% fall in industrial output in January was shrugged off, after a poll of manufacturers indicated that production this month would jump by 4.7%, the biggest monthly gain in 45 years. This lifted machine-tool makers by as much as 3%.

Greenspan's lukewarm forecasts were not enough to inspire Hong Kong investors. Traders are wary ahead of next week's annual budget, which many fear will contain tax rises as the government grapples with a fiscal deficit. Stocks in property companies, which are likely to be hit by a rise in real estate taxes, took the brunt of the selling which took the Hang Seng index down 166.2 points to 10,482.5.

Big developers lost up to 3%, while stocks of export-driven enterprises were battered by disappointment that the US economic recovery is not likely to be robust. With HSBC Holdings days away from publishing full-year earnings, the shares were hit by another bout of nerves, and dropped HK$1 to HK$86.25.

South Korean stocks fell on heavy institutional selling. The Korea Composite Stock Price Index, or Kospi, fell 2.12 points to 819.99..

Australian stocks were becalmed as investors stood back ahead of what could be a bout of disappointing earnings figures from blue-chips, and the All Ordinaries index was unchanged at 3358.6.

A dramatic turnaround in Singapore's economy helped the Straits Times index up 13.2 points to 1715.6. Third-quarter gross domestic product rose 5.6% over the previous three months, when it fell 11%.

In Thailand, stocks slipped as losses in the banking sector outweighed speculative buying of companies with good corporate news. The SET index finished 0.41 point lower, or 0.1 percent, at 371.81.

Malaysia's Kuala Lumpur Composite gained 4.99 to 708.91 and Indonesia's Jakarta Composite slipped 1.256 points to 453.246. Taiwan markets were closed.

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