Asian shares weighed by European woes

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HONG KONG: Stocks mostly fell in Asian trade Wednesday, with news that Portugal's debt rating had been slashed to "junk" status tempered by upbeat US data and optimism over Japan's corporate outlook.

A tepid performance on Wall Street -- which returned Tuesday from a long weekend -- gave little direction after enjoying its strongest week in two years.

Hong Kong fell 0.50 percent, Sydney dipped 0.21 percent and Shanghai lost 0.67 percent while Seoul was flat.

Tokyo gained 0.16 percent by the break, extending gains for a seventh straight session.

In New York the Dow fell 0.10 percent after surging 5.4 percent over the previous five days.

Moody's Tuesday cut its rating on Portugal by four notches to Ba2 and warned it could go even lower due to a risk the country could need a second bailout after already receiving 78 billion euros ($112 billion) earlier this year.

It added that the move was also based on rising concerns Lisbon would not meet deficit reduction and debt stabilisation targets agreed with the European Union and International Monetary Fund (IMF) for the first bailout.

Moody's said its main concern was that Lisbon would require a second bailout, just as Greece now does, and that private sector creditor banks would have to take some of the pain.

Tuesday's cut came a day after another rating agency, Standard & Poor's, warned that proposals aimed at helping Greece with a new bailout could still amount to a selective default.

Investors had been boosted at the end of last week after Greek lawmakers agreed to a set of austerity measures that allowed Greece to receive a handout and avoid a devastating default that many feared could spark another global crisis.

Despite the developments, the euro held its own against major currencies, helped by expectations the European Central Bank will raise interest rates when its policy board meets on Thursday.

In early Tokyo trade it was sitting at $1.4444 from $1.4418 in New York late Tuesday and at 116.82 yen from 116.92 yen. The dollar fetched 80.85 yen, slightly down from 81.10 yen.

Hopes for the US economy were lifted on Tuesday with the release of data showing signs of a recovery from the supply disruptions caused by Japan's March 11 earthquake.

The government said new orders for manufactured goods rose 0.8 percent in May from the previous month, after a 0.9 percent drop in April.

"Excessive concerns about the US economic slowdown are subsiding, but the concerns are still there, so investors want to confirm US jobs data," Yutaka Miura, a senior technical analyst at Mizuho Securities, told.

Closely watched monthly US jobs data for June are due out Friday.

In Tokyo shares remained in positive territory as investors were relatively optimistic about signs of a recovery in manufacturing activity after the earthquake and are looking ahead to the start of the earnings season, an analyst said.

On oil markets New York's main contract, light sweet crude for August delivery, was up 26 cents at $97.15 a barrel and Brent North Sea crude for August delivery rose 15 cents to $113.76.

Gold opened at $1,513.00-$1,514.00 an ounce in Hong Kong, up from $1,496.50-$1,497.50 at close on Tuesday. (AFP)