New rules, US hopes revive Nikkei

After touching 11,650, a level not seen since August last year, the Nikkei 225 eased for a gain of 10.08 points at 11,358.53. Investors ignored a warning from Moody's that a downgrading of the country's credit rating was still possible, if not imminent, and were unmoved by a 14.5% slide in capital spending in the three months to the end of December.

Early gains were inspired by figures showing that the US service industry expanded at its fastest rate for 15 months in January. This lifted exporters, led by Sony, and motor manufacturers that will benefit from a US rebound, and the continuing relative weakness of the yen. There was also last-minute bear covering as new rules on short selling took effect.

Hong Kong stocks were subdued ahead of the budget to be presented today. It has to tackle the government deficit that is at HK$60bn (£6bn) and rising. The Hang Seng index edged up 17.2 points to 11,003 thanks to gains in mobile telephone operators China Mobile and Hutchison Whampoa, but turnover was limited as traders braced themselves for some rare tax increases.

The budget is being presented in the shadow of a recent report warning that Hong Kong's reserves of HK$369bn could disappear in seven years if the deficit was not tackled. Prospects that property sales would be hit by any rise in taxes left developers' stocks mixed while shares in HSBC Holdings eased amid profit-taking on concerns local bad debts may rise. Cathay Pacific shares fell 1.5% ahead of figures showing that profits last year slumped by 87% as traffic dwindled.

Taiwan stocks continued their recent strong rally on export hopes, and the Weighted index surged through 6000 with a gain of 132.92 points to 6090.67. South Korean stocks continued to slow as the Kospi index approached the key 850 level. With steel giant Pohang Iron & Steel weighing down the market, the index slipped 0.72 to 841.23.

In Sydney, the US moves on steel brought BHP Billiton down by 0.6%. Although the company is not expected to be hit directly, it warned that world steel prices could come under pressure. Telecoms group Telstra's shares lifted the market with a 3.4% rise after it unveiled on-target half-year profits, and the All Ordinaries index rose 69.5 points to 3451.2.

Chip makers in Singapore powered ahead on hopes that demand from US computer manufacturers is about to rebound, but weakness in bank shares left the Straits Times index down 6.7 points at 1799.6.

In Thailand, the stock market continued to defy gravity as more funds poured in and the SET index rose 8.21 points to 392.76. Indonesian stocks were also lifted by foreign buying and the Jakarta Composite index added 5.56 points to 464.83 while slow trading in Kuala Lumpur saw the Composite index edge up 0.79 to 737.48.

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.