Asia stocks may get reprieve from U.S. rally

Asia stocks may get reprieve from U.S. rally

HONG KONG (Reuter): Asian stock markets are likely to receive an early boost this week from Wall Street's surge to last week's record close.

The Dow Jones industrials index rallied around 60 points to end just shy of the 6,000 milestone after weak U.S. employment data helped soothed rate fears and sparked a rally in the bond market.

Brokers in the key Tokyo and Hong Kong markets warned, however, that any gains may be hard to sustain as both centers were still expected to stage some sort of consolidation.

The benchmark Nikkei 225 in Tokyo is expected to move in the 20,800 to 21,800 range this week. It closed 183.47 points down at 21,148.03 on Friday. The previous Friday, it closed 85.65 points higher at 21,547.02.

"I hope a surge in the New York market will improve sentiment in the Tokyo market," said Masaaki Higashida, strategist at Nomura Securities Co.

"But Tokyo stocks are very likely to be trapped in a narrow range considering a lack of strong buying factors." he said.

A surprisingly weak U.S. September jobs report should give Hong Kong stocks a boost early this week but analysts said some consolidation is likely in store after the market's recent rally.

"This is the type of data that can bring the Hong Kong market back above the 12,000 mark but somewhere along the line there is going to be some sort of correction albeit minor perhaps," said Kent Rossiter, institutional sales manager at Nikko Securities.

The Hang Seng shed 109.05 points on Friday to 11,905.51. It rose 146 points, or 1.24 percent, over the week.

Thai stocks are likely to see some positive reaction to Wall Street's rally on Friday, but looming economic and political problems will restrain gains, brokers said.

"Wall Street's surge on Friday will certainly add positive news to the market. But the concern on local economic and political problems will hinder investors' aggressive buying," said one broker at Nava Finance and Securities.

The SET index closed Friday at 1,004.89, down from 1,047.95 a week ago.

In Kala Lumpur, analysts said they expect institutional investors to continue to focus on large-capitalized blue-chip stocks.

"We foresee a continued allocation of foreign funds into Asia next week, with Malaysia being a beneficiary of some of these," said John Engle, managing director of brokers HG Asia.

Week-on-week, the Composite Index was up 19.6 points at 1150.18, while the Second Board Index was down 24.34 at 571.24.

The steep rise of the Dow on Friday will likely push up Manila shares early this week but brokers said they do not expect the momentum to continue.

"I don't think the Dow's rise will have a lasting effect on the local market," said Fritz Aclan, research director at Dharmala Securities.

The main index fell by 2.87 percent week-on-week to close at 3,131.14 points on Friday from 3,223.71 on Sept 27.

A technical rebound following concerns about rising tension on the Korean peninsula is expected to limit further falls on the Seoul bourse this week, brokers said.

Pyongyang threatened to retaliate over a submarine incident prompting Seoul to step up security against possible attack.

"Falls in large-cap shares are likely to be eased. And the market will show a sign of slight improvements led by asset-rich shares," said Lim Seong-un of Daewoo Securities.

Brokers expect the market to hover around the 785 level this week.

The Singapore stock market is expected to stage a better performance this week in a technical rebound, dealers said.

"Technically, this market has experienced a week-long downward move. I think it has bottomed out," a dealer with a European broking house said.

On Friday, the key Straits Times Industrials Index closed flat at 2,148.86 against a close of 2,171.05 in the previous week.

Australian shares are expected to have another firmer week, with direction early in the week set by Wall Street's positive reaction to the release of U.S. payrolls data on Friday.

The key All Ordinaries index finished the week at 2,315.5, up 32.5 points or 1.4 percent over the week.

"In general, the U.S. market is likely to continue its rise in the lead up to the presidential election and the Australian market should be carried along in its wake," said Jim Tredenick, a dealer at Brisbane broker, Nevitts.

Taiwan share prices are expected to rise gradually this week to establish a higher upside on momentum gained from this week's record highs, brokers said.

"The market is in good shape right now, enjoying above average confidence and encouragement from this week's gains," Wang Jieh of Foremost Securities said over the weekend.

On Friday the index closed at a 1996 high of 6,616.21 points, breaking the previous high set just one day earlier. A 6,600- 6,730 trading range was seen for this week.

Lingering political instability fears will weigh on Indian shares this week, already reeling under slowing corporate earnings, brokers said.

A Delhi court is scheduled to hear former premier P.V. Narasimha Rao's request on Monday to quash an arrest warrant against him in a forgery case.

The ruling minority coalition government needs Rao's Congress party's support to stay in office.

In the week to Friday, the 30-share Bombay Stock Exchange index lost 153.46 points, or 4.71 percent, to 3,101.27 with foreign and domestic funds among the big sellers.