Asian markets mixed, dealers await Spain debt sale

Danny McCord
A TV cameraman films a share price index at the Tokyo Stock Exchange, 2011. Asian markets were mixed as dealers cautiously await a crucial bond auction in Spain, while Wall Street provided a soft lead after falling on disappointing corporate earnings

Asian markets were mixed on Thursday as dealers cautiously awaited a crucial bond auction in Spain, while Wall Street provided a soft lead after falling on disappointing corporate earnings.

A report in Chinese state media that the central bank would boost liquidity in the nation's giant economy provided some regional support.

Tokyo slipped 0.82 percent, or 78.88 points, to 9,588.38, Seoul fell 0.23 percent, or 4.67 points, to 1,999.86 and Sydney closed 0.32 percent, or 14.0 points, higher at 4,362.7.

Hong Kong rose 1.03 percent, or 214.28 points, to 20,995.01 and Shanghai ended flat, dipping 2.22 points to 2,378.63.

With the eurozone debt crisis back in focus, investors were looking to a sale of Spain's benchmark 10-year government bonds later in the day for an indication of market confidence in the under-pressure country.

Asia rallied on Wednesday after Madrid successfully sold 12- and 18-month debt, albeit at a higher rate.

"There will be a lot of attention on tonight's Spanish 10-year bond auction and the result will give a good indication on how the market will perform in the next few days," said Miguel Audencial, sales trader at CMC Markets.

"There is potentially a good upside if yields are low. However if Spain's cost of debt breaches the six-percent barrier" a selloff in commodities and shares is likely, Audencial said in a note, according to Dow Jones Newswires.

Investors are also looking ahead to a G20 meeting on Thursday and Friday that will discuss boosting the International Monetary Fund's debt-crisis war chest to $500 billion.

"Amid growing concerns over Spanish (debt) financing, the meeting failing to agree on enough expansion of the safety net would put selling pressure on the euro," said Masafumi Yamamoto, currency strategist at Barclays Capital.

Japan Wednesday pledged $60.0 billion to the fund, saying it was a critical part of the organisation's bid to boost a global firewall against Europe's debt crisis.

Sweden, Norway, Denmark and Poland are among the nations that have since pledged billions of dollars to the effort, but it was unclear what figure would be settled on at the meeting.

Before Tokyo's market opened, Japan posted a record 4.410 trillion yen ($54.2 billion) trade deficit for the 12 months to March as car and electronics exports slumped while energy imports soared after the Fukushima nuclear crisis.

The country's overseas shipments took a hammering last year as the March 11 quake-tsunami as well as floods in Thailand -- where many Japanese firms have plants -- slammed production, while the European debt crisis cut into demand.

However, figures also showed a deficit of just 82.6 billion yen in March, well below economists' expectations for a deficit of 223 billion yen.

Wall Street's main indexes ended in the red as earnings reports, although better than expected, left dealers unimpressed.

The Dow shed 0.63 percent, the broader S&P 500 lost 0.41 percent and the Nasdaq dropped 0.37 percent.

China's official Xinhua news agency late Wednesday quoted a central bank official as saying it would increase bank liquidity, including through cuts in reserve requirements. That lifted Sydney shares, with miners leading gains.

The report comes amid hopes for monetary easing from Beijing as the economy slows and manufacturing stutters in the world's number two economy.

The dollar firmed to 81.50 yen in afternoon Asian trade from 81.23 yen in New York late Wednesday. The euro bought $1.3132 and 107.02 yen against $1.3120 and 106.59 yen.

On oil markets, New York's main contract, West Texas Intermediate crude for delivery in May was rose 25 cents to $102.92 per barrel while Brent North Sea crude for June gained 42 cents to $118.39 in late afternoon trade.

Gold was at $1,642.75 an ounce at 0810 GMT, compared with $1,647.00 late Wednesday.

In other markets:

-- Taipei closed 0.23 percent, or 17.69 points, higher at 7,622.69.

TSMC was 0.94 percent higher at Tw$85.8 while Hon Hai Precision fell 2.31 percent to Tw$105.5.

-- Manila closed 0.24 percent or 12.92 points, lower at 5,173.28.

Philippine Long Distance Telephone shed 0.85 percent to 2,550 pesos and Ayala Land dropped 1.5 percent to 21.55 pesos.

-- Wellington closed flat, edging up 2.43 points to 3,525.19.

Contact Energy added 0.20 percent to NZ$4.91 and Telecom was unchanged at NZ$2.53, while Air New Zealand was up 1.15 percent at NZ$0.88.