Asia Stock Gains Fade In Choppy Session

Asia stocks on Tuesday traded mostly flat to lower as dividend worries dented Japanese utility firms while steel makers weighed in Seoul.

Japan’s Nikkei Stock Average  put in a flat performance, while South Korea’s Kospi  declined 0.4% and the Shanghai Composite Index lost 0.7%.

Australia’s S&P/ASX 200 index  managed to gain 0.1% and Hong Kong markets were closed for a holiday.

Most Asian markets have gained so far this month, and those gains have been made against emerging Asian economies that “are not really booming but [are] still quite robust,” said Lucinda Chan. division director at Macquarie Private Wealth.

In addition, U.S. earnings numbers out in the past few weeks “have been quite reasonable,” she said, while the U.S. economy has shown some signs of improvement.

Tuesday’s moves in Asia came after U.S. stock markets on Monday recouped early losses to end the session higher, with earnings helping drive the day’s action. Read: Yahoo up on results, hint of stock buyback

Also, the third and final debate between U.S. President Barack Obama and challenger Gov. Mitt Romney took place during Asian morning trade and U.S. stock futures edged lower after the debate wrapped up. Follow the final debate live.

Both contenders commented on China, with Obama saying he will insist that China play by the same rules as everyone else. Romney echoed those comments and reiterated his pledge to immediately label China a currency manipulator should he be elected.

“Coming into tonight’s debate, President Obama retained a small structural advantage, and I suspect that he will retain that advantage after this debate,” said Nomura economist Lewis Alexander in a note.

Major movers

Dividend concerns weighed on the Japanese utility sector, as Kansai Electric Power Co.   fell 13% after a Nikkei report that the electricity supplier won’t pay a dividend at the end of the fiscal year, which would be its first dividend omission in 61 years.

Kansai Electric’s rivals were also weak, with Chubu Electric Power Co.   down 9.9% and Tokyo Electric Power Co.    slipping 1.5%.

Energy-sector firms likewise declined in Tokyo, with JX Holdings Inc. down 1.6% and Japan Petroleum Exploration Co.    down 1% after a 1.5% drop for crude-oil futures in New York on Monday. Read: Oil ends lower; pipeline, Mideast, dollar in focus

In the foreign-exchange market, the U.S. dollar  briefly traded over ¥80 for the first time since early July on Tuesday, up from ¥79.91 on Monday, before falling back to ¥79.89 as immediate central bank-easing hopes faded. The euro reached its highest point against the yen since May but then also retreated.

Despite the yen’s rebound, the dollar was still at relatively elevated levels against the Japanese currency, and some exporters held their gains in Tokyo on Tuesday, with Casio Computer Co.   up 2.8%, Nikon Corp.   adding 1.6% and Panasonic Corp.   ahead by 0.6%.

Fuji Heavy and Subaru

Subaru brand vehicle maker, Fuji Heavy Industries Ltd.  , gained 3.8% after raising its net profit view to ¥40 billion from a prior estimate of ¥23 billion.

In South Korea, steel makers were adding pressure to the market, with the world’s fourth-largest producer, Posco ,  lower by 2.7% ahead of its earnings report due late Tuesday.

Standard & Poor’s downgraded its long-term-debt rating on the firm to BBB+ from A- late Monday, saying that the firm will struggle to secure financing and that its operational performance will likely be weaker than previously expected.

Among its rivals, Hyundai Steel Co.  declined 1.8% while Dongbu Steel Ltd.  lost 0.6%.

Mainland-listed Chinese commodity firms were also weak, with Aluminum Corp. of China    down 0.6% in Shanghai, and Angang Steel Co.    0.6% lower in Shenzhen.

However, Australian commodity extractors underpinned gains in Sydney, with Oz Minerals Ltd.  up 1.9% after saying that it’s on track to meet its fiscal-year copper and gold output guidance.

Elsewhere in the sector, Rio Tinto Ltd.     rose 0.1% while Fortescue Metals Group Ltd.  advanced 1.7%.


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