Asia Stocks Mixed Ahead Of ECB Meeting

Asia stocks ended higher Thursday, with investors looking ahead to a European Central Bank meeting later in the trading day, where officials are expected to put forward a broad strategy to tackle the region’s crisis.

Australia’s S&P/ASX 200 Index XJO gained 0.8%, South Korea’s Kospi SEU added 0.4%, and China’s Shanghai Composite 000001 rose 0.7%.

Hong Kong’s Hang Seng Index HSI closed 0.3% higher, rebounding after closing at a six-week low in the prior session, and Japan’s Nikkei Stock Average 100000018 ended little changed.

The Asia Dow was little changed late afternoon in East Asia, easing 0.01%.

Shares of mainland China locomotive and rolling-stock manufacturer CSR Corp. 1766 jumped 8.8%, rising in sync with other state rail companies, after the central government approved plans to build dozens of subway and inner-city rail transit links as part of infrastructure spending stimulus. See related story on China’s massive city-rail initiative

Hong Kong turnaround

Louis Capital Markets head of Japanese equities Ben Collett in Hong Kong said the mid-session turnaround in Hong Kong was driven in part by investors unwinding short positions on the view that equity prices were already factoring in the weaker economic environment.

He added that fund managers were also likely taking profits on winning bets in shares like Samsung Electronics Co. and rotating the proceeds into cheaper stocks in the hope of capturing gains from an expected rebound in the fourth quarter

“This would be a reasonable [valuation] level to put some risk back on,” Collett said.

The performance in Asia followed a mixed showing for U.S. stocks overnight, with investors cautious ahead of the ECB policy decision. ECB President Mario Draghi was expected to unveil measures to ease debt-market conditions and promote growth. Read more on the U.S. session.

Michael McCarthy, chief market analyst at CMC Markets in Sydney, said optimism about likely efforts by the ECB to stabilize the euro zone was encouraging some traders.

“It appears there is a realistic chance that something will happen. The market thinks Draghi could be the man to pull it off,” McCarthy said.

Among gainers in Sydney, diversified miner Rio Tinto Ltd. RIO RIO  RIO rose 1.5% and energy major Santos Ltd. STO  SSLTY put on 2.4%.

“There’s some short-covering ahead of tonight’s event risk, particularly energy and resource stocks, which have been aggressively shorted recently are bouncing hard today,” CMC Markets’ McCarthy said.

Rare-earths miner Lynas Corp Ltd. LYC surged 43% after winning a temporary operating license for its processing facility in Malaysia.

Also in Sydney, shares of Qantas Airways Ltd. QAN  QUBSY ended flat, reversing gains, after the carrier secured an alliance deal with Emirates Airline. Read more on Qantas-Emirates deal.

Seoul and Tokyo

Exporters climbed in Seoul, as LG Electronics Inc. LGEIY rallied 1.4% and Samsung Electronics Co. SSNGY  005930 added 0.6%.

The gains came even as South Korea revised second-quarter gross domestic product lower. Read more on South Korea’s Q2 GDP.

In Tokyo, tech exporters were weak following a modest drop for the Nasdaq Composite Index COMP overnight.

Toshiba Corp. 6502 TOSYY sank 3.7%, Fujitsu Ltd. 6702  FJTSY fell 2%.

Shares of Sharp Corp. 6753 SHCAF slumped 4.3% after Moody’s downgraded the company’s short-term credit rating, according to Dow Jones Newswires.

Sharp said Thursday it would use all its Japanese land and buildings as collateral for new loans, except for several properties it’s trying to sell. Read more on Sharp’s loan collateral.

Shares of Sony Corp. 6758  SNE traded 0.4% lower after it said information on 400 of its Chinese and Taiwanese mobile customers had been hacked. Sony suffered other cyber attacks earlier in the year. Read more on Sony hacking statement.

Auto makers higher

Gains for major auto makers tempered broader losses. Toyota Motor Corp. 7203 TM added 1.6%, Honda Motor Co. 7267 HMC rose 1%.

Shares of Suzuki Motor Corp. 7269 SZKMY  closed up 1% after its chairman said production was picking back up in India after riots closed a key factory there. Read more on Suzuki chairman’s comments.

Losses for property stocks helped tip Hong Kong into negative territory as Hang Lung Properties Ltd. 101 HNLGY  surrendered 1.4% and China SCE Property Holdings Ltd. 1966 slumped 5.6%.

Consumer names bucked the downbeat trend, with Esprit Holdings Ltd 330 up 2.7% GDNEYin Hong Kong, while Zhejiang Golden Eagle Co. 600232 rose 0.6% in Shanghai.

China Foods Ltd. 506 CHFHY put on 0.5% after Deutsche Bank upgraded its recommendation on the stock to buy, noting “performance, especially on wine, has been better than expected under the new chief executive.”

Also in Hong Kong, Lenovo Group Ltd. 992  LNVGY rose 3.9%, helped by news Wednesday it had finalized a deal to buy Brazilian consumer-electronics maker Digibras Participacoes for $147 million.

Marketwatch