Sick yen piles on torment for Asia

Sick yen piles on torment for Asia

SINGAPORE (Reuters): Asia's markets took another dive yesterday, as nerves over the weak yen and its impact on regional economies swept trading floors for the second straight day.

The dollar rose above 142 yen in late Tokyo trade, as dealers reacted to signs that the world's leading economies were not about to intervene on the Japanese currency's behalf. It later fell back to around 141.30/40.

As on Wednesday, the main fear on Asian markets was that the yen's fall would drag regional currencies lower and eventually push China into devaluing its yuan currency.

Despite analysts' belief that such a move was unlikely in the near term and Chinese statements ruling it out, markets still quaked at the prospect.

Japanese shares slumped over two percent in line with the yen and on growing fears of renewed economic upheavals in Asia, while Hong Kong stocks ended more than one percent down after paring heavy early losses.

Manila shares took the region's biggest hammering, falling nearly five percent, and most regional currencies wilted.

Shares in Singapore, South Korea and Indonesia provided some relief, but traders put the gains down mostly to rebounds after Wednesday losses.

Poor regional sentiment rebounded on Tokyo markets with a vengeance, with banking shares hit hard by concerns the turbulence in Asia would add to their already-heavy load of bad loans, brokers said.

Tokyo's key 225-share Nikkei average lost 325.22 points, or 2.12 percent, to close at 15,014.04.

"The Japanese stock market suffered psychological damage from Asia," said Ritsu Matsushita, director at the asset management department of Invesco Asset Management (Japan) Ltd.

Hong Kong shares followed up a near five-percent tumble on Wednesday with a fall of 1.17 percent yesterday, as bargain- hunters helped the market claw back big early losses. The Hang Seng index dropped 93.30 points to 7,886.07.

Australian markets were rocked again by Asia nerves, but the embattled local dollar managed to bounce above 59 U.S. cents after hitting a 15-year low of 0.5824/30 on Wednesday.

But Sydney stocks fell, losing 1.32 percent on fears that official interest rates would be hiked.

Late buying linked with arbitrage trading helped the South Korean stock market reverse course to close higher yesterday, brokers said.

The Korea Stock Exchange composite stock price index added 1.28 percent, or 4.16 points, to 328.70.

Manila stocks plunged more than four percent on fears of a regional currency meltdown and the Philippine peso sank to 40.24 to the dollar. The main share index fell 88.85 points to settle at 1,829.02.

Southeast Asian markets had a mixed day, but the outlook remained generally grim, dealers said.

Thailand's SET index ended off 2.80 percent, or 8.18 points, at 283.92, as the bleak regional mood hit commercial and building stocks.

Singapore shares ended higher after a week of selling. After hitting a low of 1,048.52 in the morning, the Straits Times Industrials Index closed at 1,086.83, up 1.78 percent, or 19.02 points.

Malaysian shares ended 1.4 percent down on regional woes, while Jakarta shares were helped up by foreign buying to close 0.85 percent higher.