Nikkei hit as bad debts soar

JAPANESE investors had some second thoughts about the outlook for the big banks following yesterday's batch of interim results that showed bad debt provisions this year were set to rise to 6.5 trillion yen (£37.1bn), which is more than triple the size of earlier estimates.

The size of the problem overcame earlier optimism that the bankers were at least taking concrete steps to tackle the problem.

Further hit by the downgrading of Japan's credit rating by Fitch, banks' shares shed up to 2%, and while electronics stocks moved ahead, the Nikkei 225 Average lost 115.41 points to 10,948.89.

Investors were braced for another batch of bad news, this time from to insurance companies, who report today. Their solvency margins are expected to have been mauled by losses on their massive stock market investments as the Nikkei 225 fell 25% over the six-month reporting period. Hong Kong investors hung back ahead of US consumer confidence data expected today which will provide clues to the prospects of the territory's big traders. Hong Kong's exports tumbled 14% in October, the steepest decline in three years as the key US market continued to slow.

The Hang Seng index fell 130.42 points finishing at 11,261.54 having been pulled down by nervousness over the outlook for property stocks.

China Mobile, the locally quoted cellphone operator in which Vodafone has a 2% stake, rose 0.5% despite news that the mainland's main fixed-line provider is to be broken up, raising fears of increased competition down the line.

South Korea's recent winning streak slowed as profit-takers sold recent big movers, and the Kospi Kospi, fell 4.46 points to 670.10. Investors ignored a government forecast that gross domestic product would rise in 3% in the first half of next year against an expected 2.5% advance this year, and last year's 8.8%. Biggest fallers in Seoul were financial stocks, which have led the recent rally.

Taiwan stocks failed to hold on to early gains, despite solid rises in chipmakers following a forecast from Taiwan Semiconductor that profits would be 30% ahead of earlier estimates this year. A mixed performance by banking and other financial stocks left the Weighted Index down 27.99 points to 4,580.33.

Singapore stocks tracked upward for the third day on hopes of an impending US recovery. The Straits Times index rose 26.55 points to 1,502.10, as technology stocks reacted to overnight strength on Nasdaq.

Australia's recent boomlet continued with the All Ordinaries testing levels not seen since end-July. Led by retailers and resource stocks the All Ordinaries added 6.7 points to 3291.4, cementing a 15% gain from its September low and a 4.4% rise on the year. Stores chain Cole Myers reinforced recent good sales news from Woolworths and predicted profits will rise 20% this year. This took the shares up 4%, while mining stocks BHP Billiton and Rio Tinto added up to 3% on rising copper prices following the temporary closure of a Papua New Guinea mine.

Thailand's SET index rose 3.90 points to 296.46, driven by local property giant Bangkok Land, which rose on reports of a big new development.

Malaysia's Kuala Lumpur Composite index was down 2.13 points at 638.35, and the Jakarta Composite drifted off 0.452 of a point to 380.976.