SINGAPORE, Sept 29 - Export stocks, such as auto maker Honda Motor Co <7267.T>, fell on Monday as the yen edged back toward three-year highs against the dollar on growing optimism about Japan's economy ahead of a key survey. Other Asian share markets, such as Japan's export competitors South Korea and Taiwan, were marginally lower as investors sold exporters anticipating continued dollar weakness. Expectations were growing that the Bank of Japan's quarterly "tankan" business sentiment survey on Wednesday could show its headline index rising to -- or even above -- the neutral zero level for the first time in nearly three years.
"What we're seeing now is not dollar weakness. It's yen strength," said Kosuke Hanao, head of foreign exchange at the Royal Bank of Scotland. At 0620 GMT, the dollar was at 111.22 yen and 1.1454 to the euro. The euro bought 127.40 yen. Traders said a strong reading in the previous tankan report had been a major factor behind foreign fund inflows into Japanese shares over the past few months. Japan's Nikkei stock average <.N225> ended at a one-month low, down 0.86 percent at 10,229.57. The broader TOPIX index <.TOPX> lost 1.00 percent. Hong Kong's Hang Seng index fell on profit taking in property and banking stocks after a three percent rally last week. Investors were also waiting for details on a landmark free trade deal with China. "It's a healthy consolidation after last week's strong rally," said Daniel Poon, head of Hong Kong and China equities at ABN AMRO Asia Ltd. The benchmark Hang Seng Index <.HSI> slipped 0.93 percent to start the afternoon at 11,185. MSCI's index of Asian stock market activity outside of Japan <.MSCIAPJ> was 0.46 percent lower.
WALL STREET'S LEAD
Traders around Asia blamed losses on last week's correction in U.S. stocks. South Korean shares traded near a 12-week nadir but the benchmark Korea Composite Stock Price Index (KOSPI) <.KS11> recovered to close only 0.19 percent lower at 696.06. The world's largest memory chip maker, Samsung Electronics Co Ltd <05930.KS>, had lost 1.68 percent earlier in the session, but closed just 0.39 percent down. Taiwan investors bet on domestic plays as tech stocks came under pressure from losses in U.S. markets. They pushed construction shares higher, but not enough to lift the TAIEX <.TWII>, which fell 0.12 percent to 5,643.50. Australian stocks eased after investors shrugged off Wall Street jitters but remained cautious as insurers such as Promina and some banks fell after recent solid gains. Singapore shares slipped into negative territory in lacklustre trade as a scarcity of fresh leads and weakness on Wall Street dampened interest.
Heading into the afternoon, the key Straits Times Index <.STI> had slipped 0.06 percent to 1,626.63. Spot gold traded higher in Asia, prompted by a stronger yen, but gains were limited due to profit-taking, keeping gold around $381.00 an ounce. NYMEX crude futures were firmer in thin trading, supported by technical buying and expectations for tighter OPEC supplies, with front-month November <0#CL:> up 21 cents at $28.37 a barrel on moderate volume. //