Tokyo unnerved by US rates worries

ASIA markets were waiting for Federal Reserve chief Alan Greenspan today. Investors watched to see if the Fed board would downshift again on Tuesday to keep the US economy on the growth track.

There was little sign of any follow through from last week's rebound in New York stocks as traders looked at the conflicting signals from the US. Some were encouraged by a chorus of calls from major investment banks for another paring of rates while others detected a lack of any Fed enthusiasm for fast action. Nerves were also stretched by the possibility of a downbeat review of the US economy emerging from tomorrow's Fed meeting.

Uncertainty over the impact of any cutting of rates on the performance of the dollar unsettled Tokyo stocks, as the renewed strength of the yen cast a shadow over the earnings outlook of major exporters. The Bank of Japan also warned that the strength of the yen was threatening the country's recovery prospects. The Nikkei 225 crumbled 251.97 to 9747.82, led down by the recently volatile shares of electronics groups and motor manufacturers.

Foreign investors rebooted their temporarily suspended sell programmes on Japanese stock, putting more pressure on the Nikkei in trading, which was thinned out by the holiday season. Their exit drove down dollar-sensitive stocks, and Sony Corporation lost more than 4%, while Toyota slumped 3% on concern about the outlook for its key US sales.

Fed-watching was the most popular pastime in Hong Kong where the link between the greenback and the local dollar means US rate changes are instantly followed by local banks. After a brief break above 10,000, the Hang Seng slipped to 9960.7, down 53.4. The joint deal with Singapore-Telecom to buy a key stake in the troubled Global Crossing group raised few cheers among investors in Hutchison Whampoa, who fretted about the conglomerate's increasing exposure to the telecommunications sector, and the heavyweight stock dipped 0.5%.

Nor was any enthusiasm generated by promising property sales at the weekend, as fears of a price war among developers continue to mount. Falls among leading property companies reached 1.5%.

Signs of consolidation in the banking industry in Taiwan and South Korea underpinned both markets. The Kospi index in Seoul added 2.75 points to 695.20 as a bid for Seoul Bank by rival Hana raised hopes of more action. In Taiwan, shares of United World Chinese Commercial Bank soared 7% on reports of a bid from Cathay Financial Holdings, but with other sectors mixed the Weighted index still dipped 18.92 to 4832.52.

Strong signs that Australian interest rates are heading in the opposite direction from those in the US as the Reserve Bank damps down inflation left the All Ordinaries down 1.3 at 3051.5. Reports that National Australia Bank may go into battle for Abbey National left the shares slightly down although the company said a hostile bid was unlikely.

Strong second-quarter growth in Singapore boosted the Straits Times index by 11.98 points to 1498.79 while the Wall Street rally lifted Thailand's SETindex

7.04 to 367.07. Malaysia's Composite index eased 0.29 to 722.89 and Jakarta's Composite dropped 2.55 to 447.69.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.