Investors swayed by currencies rise

CURRENCIES were weighing heavily on the minds of investors in Asia on Wednesday,

Dubbed the 'Pacific peso' only 10 months ago, the Aussie dollar has risen 25% this year to regain the 70-cent levels against the greenback not reached since before the 1997 Asian financial crisis.

The resurgent currency will have an impact on some of Australia's biggest companies - mainly the miners - which earn US dollars.

By contrast, in Japan the rising yen's potential impact on the domestic economy weighed down stocks. The yen has risen 8% against the greenback in the past three months.

Japan's former Finance Minister Masajuro Shiokawa said the yen's rise has been a 'bit too rapid' and was starting to hurt Japanese exporters.

This prompted the Nikkei to lose ground for a second day running. It fell 141.90 points to close at 10,889.62.

Mizuho Financial Group led declines on fears that a

higher yen threatens the tentative recovery of the economy. The stock was down 8% to 276,000 yen.

Toyota, which derives 80% of its profit from North America, declined 1.17% to 3,370 yen and Honda, which relies on the US for 90% of profits, fell 1.59% to 4330 yen. Oji Paper, Japan's largest paper maker, fell 3.57% to 594 yen on reports that it will miss profit forecasts by two billion yen for the half-year to September.

Despite currency concerns, the enduring strength of the Australian economy, one factor for the dollar's rise, helped stocks advance at one stage but the All Ordinaries index closed 5.3 down at 3305.3.

Ahead of production reports later this week, BHP Billiton was up 0.5% to A$11.97 (£4.94) while Rio Tinto rose 0.08% to A$36.10.

Dominant market issue News Corporation fell 1.35% to A$12.42 and Anglo-Australian logistics firm Brambles, susceptible to a rising Aussie dollar, was down 1.86% to A$4.79 after weak trade in offshore markets. Investors, apparently warming to the prospect of ANZ banking group's potential acquisition of National Bank of New Zealand, edged the stock 0.33% higher to A$18.32. Qantas rose 0.85% to A$3.56 on hopes that the New Zealand regulator will have a change of heart and allow a merger with Air New Zealand.

In Hong Kong, the Hang Seng was down 0.07%, or 8.87 points, at 12,241.82 as blue-chips gave up recent gains. Attention was focused on an economic report due after the market's close from Financial Secretary Henry Tang.

Banks gave up recent gains. Beijing-backed BOC Hong Kong lost 2.46% to HK$13.90. The shares have reflected growing confidence in the territory, rising 78% over the past three months. HSBC was the exception. It rose 0.88% to HK$114, continuing its 17% climb over three months. Property stocks also took a breather, Cheung Kong falling 0.38% to HK$65.75 and Sun Hung Kai Properties 0.72% to HK$68.50.

Singapore shares maintained gains which have put the Straits Times index at 18-month highs, although the pace slowed. The index was up 3.05 points, 0.17% at 1795.91.

Technology stocks led the way up, Creative Technology rising 0.53% to S$19.

Singapore Te lecom shares were up 0.56% at S$1.79, but dominant media group Singapore Press Holdings fell 0.49% to S$20.50.