Asian shares mixed despite Europe relief

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HONG KONG: Asian stock markets were mixed on Friday despite strong US growth data and rare positive news out of the eurozone after the German parliament approved a crucial EU bailout package.

Tokyo stocks edged higher in morning trade while Hong Kong, Australia and South Korea pared back slightly, after German backing of an enlarged rescue fund for debt-mired eurozone countries failed to soothe fears over the region.

Tokyo rose 0.25 percent by noon in directionless trade as investors digested the news out of Germany. The benchmark Nikkei 225 index at the Tokyo Stock Exchange rose 21.89 points at 8,723.12.

In mixed trade, the broader Topix index of all first-section issues declined 1.15 points, or 0.15 percent, to 761.15.

Standard & Poor's and Fitch Ratings meanwhile both downgraded New Zealand's sovereign rating, citing the cost of earthquake recovery and the country's worsening external debt position. The New Zealand dollar fell sharply.

Yutaka Miura, senior technical analyst at Japan's Mizuho Securities, said the Nikkei may struggle to find direction because Germany's vote to expand the eurozone's bailout fund had already been priced in.

He also noted US stocks had shown mixed performances despite positive economic data overnight.

"Short-covering at the September month-end, which also coincides with the quarter's end, has been the main driver for the market's rebound in recent days," he told Dow Jones Newswires, adding that selling pressure may increase going into next week.

In Hong Kong, the Hang Seng Index dipped 1.67 percent to 17,710.44 in early trade, while Australia's S&P/ASX 200 fell 0.49 percent to 3,987.7.

Korea's KOSPI Composite Index lost 1.21 percent to reach 1,748.01 while the Shanghai Stock Exchange dropped slightly to 2,356.48 by mid-morning.

The markets still harboured grave doubts about the eurozone, said analysts.

"There's a relief I guess that the German vote went through but it's not the last piece of the puzzle," James Rosenberg, private client adviser at Macquarie Private Wealth, told Dow Jones Newswires.

Credit Agricole strategist Mitul Kotecha added that there is still "a huge degree of scepticism" over the potential for policymakers "to resolve the crisis".

There was some good news out of the United States, where the economy grew at 1.3 percent in the second quarter, according to latest figures from the Commerce Department, a faster-than-expected clip.

The rate was revised up by 0.3 of a percentage point as investment, spending and exports all helped boost the growth rate.

In currency markets, the euro softened in Asian trade.

The euro stood at $1.3572 in Tokyo trade, down marginally from $1.3586, while fetching 103.71 yen against 104.33 yen in New York.

The New Zealand dollar was down sharply at US$0.7659 after the downgrades, from $0.7782 late Thursday.

The US dollar slipped against the yen as investors widely ignored a US government announcement that it would continue stronger market oversight and expand its intervention war chest in a third extra budget, dealers said.

The dollar traded at 76.60 yen in Tokyo, down from 76.79 in New York.

Oil prices rose in Asia. New York's main contract, West Texas Intermediate (WTI) for delivery in November, gained 53 cents to $82.67.

Brent North Sea crude for November delivery was up 28 cents to $104.23.

Prices were boosted by traders buying cheaper oil following recent falls.

Gold was at $1626.00 an ounce at 0330 GMT in Hong Kong, up slightly from its Thursday close of $1,623. (AFP)