War and oil fears grip investors

ASIAN investors were cautiously feeling their way into 2003 today after ominous signs that economically crucial US consumer spending could be set to slow. Nervousness also followed the movement of more US troops to the Gulf and a return to higher oil prices as the Venezuelan strike continued, threatening to put the brakes on any short-term global recovery.

While some markets were modestly ahead, trade was thin as dealers weighed up the potential impact of falling demand on Asia's producers of motor vehicles, microchips and consumer electronics. This prospect emerged with the latest Conference Board index of consumer confidence, released on New Year's Eve, which showed a fall in December when most economists had been expecting some strengthening.

The drop to 80.3 from 84.9 in November left the index just above the nine-year low of 79.6 recorded in October, and effectively wiped out an early rally on Wall Street. By the end of the last day's trading of the year, the Dow Jones was little changed at 8341 points, up eight points, while the Nasdaq lost four points at 1335, completing a grim three calendar years of losses.

Japan's markets were spared from damage by the long New Year holiday. In Hong Kong the Hang Seng index rose by 39.46 points to 9360.77, buoyed by rallies in mainland mobile phone stocks. After being savaged by reports that the major fixed-line operator planned a price war, China Mobile and China Unicom recovered about 2%. HSBC Holdings continued a recent modest recovery with a rise of 75 cents to HK$86.

Away from the blue-chip sector, mobiles group SmarTone continued to forge ahead, and rose 4% for a two-session gain of 8%. The agreed sale of BT's 20.8% stake to property developer Sun Hung Kai has removed the danger of the stock being dumped. South Korean stocks remained volatile after their recent 12% tumble on the growing belligerence of the North Korean regime. Some brave bargain-hunting in early trade saw gains, which were later scaled back before retail buyers returned, and the Kospi index put on 7.57 at 635.12.

Foreign investors continued to back away from the market, limiting the recovery. International institutions have been sellers since North Korean dictator Kim Jong Il tore up a UN nuclear development agreement.

The possibility of international tensions pushing the price of gold still higher this year lifted stocks of Australia's smaller mining companies, helped the All Ordinaries index to a rise of 20.70 points at 2996.20. Although more attention was being paid to the cricket Test, buyers in Sydney also moved in on leading blue-chips such as media giant News Corporation and telecoms group Telstra. In Singapore, the Straits Times index slipped by 6.57 points to 1334.50 as investors disregarded fourth-quarter growth figures that showed the economy ended the year with a 2.2% advance.

Taiwan stocks took a rest from their steady decline as selective buying of oversold electronics stocks took the Weighted Average up 90.81 points to 4543.26. In nervous trade, Malaysia's Kuala Lumpur Composite index fell by 10.09 points to 636.23 and Thailand's SET index lost 3.08 points at 353.40. In Indonesia , shares tumbled on profit-taking, which sliced the Jakarta Composite index by 14.74 points to 410.21.

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.