US bounce fails to heal the wounds

THE big bounce on Wall Street met with a cautious response from Asian investors, who are not ready to have their faith restored in the markets which have let them down badly in the past three months.

A bullish forecast on sales from the Dell Computer giant fed demand for technology stocks, but compared with the 4.6% jump in the Dow Jones Industrial Average overnight and the 3.5% gain on Nasdaq the general tone remained subdued.

Japanese stocks pulled back from a recent string of losses in early trade, but prices fell in the afternoon, leaving the Nikkei 225 down 112.93 points at 9049.33. Bank shares remained mixed as investors awaited firm evidence that the government was ready to start cleaning up their bad loans. The first move towards using public funds to bail out the sinking behemoths would have to be a change in the law to enable Prime Minister Junichiro Koizumi to authorise cash injections without first having to declare a financial crisis, it was reported.

A warning from the Mitsubishi Tokyo Financial group, the country's third-largest lender, that it would make losses in its first half was taken as a positive sign that the bank was writing down its stock holdings. While the bank's stock moved ahead, other big lenders slipped on continuing uncertainty over the impact of government action on bad debts.

Dell's improved forecast on its third-quarter earnings was good news for Japan's computer manufacturers and Sony Corporation posted a near-2% rise but shares in Gamecube maker Nintendo slid back almost 4% after it cut its profit forecast for the first half.

The Dell factor and Nasdaq's good showing also lifted technology-driven markets around the region. In South Korea the Kospi added 1.75 to 653.88, Taiwan's Weighted Average put on 35.96 points to 4198.73, and the Straits Times index in Singapore climbed 7.09 to 1362.56.

Sharp recoveries in the recently-pounded property sector in Hong Kong took the Hang Seng index up 90.32 points to 9162.53 but most attention was centred on mixed news from telecoms-to-ports giant Hutchison Whampoa.

The group, which is currently soft launching its 3G services in Britain, has pulled a e1.5bn (£942m) issue, blaming unfavourable markets. The setback was offset by the purchase of a 5% stake in Hutchison's cellular phone offshoot in Hong Kong by Japanese electronics giant NEC, which is a major supplier of handsets to the Hong Kong group, and the shares rose 1.3%.

Although Hutchison faces heavy costs in rolling out 3G services in Britain and Europe, the cancellation will have no impact on its plans as the funding for its networks is already in place.

In Sydney, shares in News Corp soared 4% on news that it had bargained down the price it is paying for the Italian pay-TV business of Vivendi Universal. Other blue-chips took their cue from Wall Street's bounce and the All Ordinaries put on 10.6 to 2951.1. Resources giant BHP Billiton added more than 1.5% and banks firmed after interest rates were left unchanged by the central bank.

Thailand's SET rose 2.83 to 336.52. The Kuala Lumpur Composite was up 4.82 to 649.81 and the Composite in Jakarta added 0.94 to 408.46.

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