Nerves ahead of Vodafone signal

THE hammering given to Vodafone shares in London on Monday concentrated attention on the mobile phone giant's Asian interests today.

Ahead of Vodafone's full-year results, Tokyo investors were keen to hear of its plans for Japan Telecom, which is controlled by the British company.

Investors were braced for a plunge into the red and the company has forecast losses of 71bn yen (£391m ). However, all eyes will be on the forecasts for the current year from chief executive Bill Morrow. In early trading Japan Telecom, in which Vodafone has a 66.7% stake, dropped more than 1%, although the shares later recovered to halve the fall.

Falling bank stocks kept the main market below 12,000 after it briefly broke through that barrier on Monday, and the Nikkei 225 drooped 40.27 to 11,936.08. Bank stocks lost up to 2%, as recent hopes of a turnaround after last year's horrendous losses were tempered by reports that the government was set to soften its stance on the sector's bad-loan problem. This raises fears that the debt mountain, which is holding back the whole economy, will continue to build.

Banks saved Hong Kong from heavier losses in morning trade. Shares of mainland cellphone operating giant China Mobile, in which Vodafone has a 2.18% stake, slipped 0.2% to HK$25.55 after a weak performance on Monday.

Hong Kong investors were nervously looking to Vodafone's results, which are bound to colour sentiment towards the global mobile phone sector. They were also prepared to see heavy write-offs on Vodafone's investment, as China Mobile shares have slumped from HK$49.00 in the past 12 months. Stronger export figures for April raised some hopes about the end of the deflationary spiral, but there was disappointment that the upturn was not stronger, and the Hang Seng index slipped 10.08 to 11,554.65.

Business was mixed, without Wall Street to provide any overnight leads because of the Memorial Day holiday.

Stronger technology shares in Taiwan on hopes that the economic recovery is becoming more solid, were outweighed by another limit down day by China Airlines shares, which fell 6.8%. The weekend's fatal crash has led to thousands of cancellations of seats by passengers nervous to fly with an airline which has now the worst safety record of any major operator. The Weighted index lost 60.37 to 5669.53.

Denials by Citroen Peugeot that it is interested in Ssangyong Motor sent the shares in the South Korean motor group skidding more than 6%, but stronger utilities left the Kospi up 1.13 points at 841.70. Bid fever in Australian mining stocks cooled after AurionGold's rejection of the offer from Canada's Placer Dome cost the stock 3%. Lacking leads from New York, the All Ordinaries index was virtually static in mid afternoon, up 0.3 at 3335.3.

A general selling down of blue-chips saw banks and technology stocks fall in Singapore, and the Straits Times index tumbled 18.85 points to 1703.46. Thailand's SET broke through the crucial 400 level, up 8.22 to 400.31, but Malaysia's Kuala Lumpur Composite lost 5.04 points to 760.82, while in Jakarta the Composite index edged up 1.15 to 513.94.

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