Japanese shares eased off six-week highs on Thursday as investors sold recent gainers such as brokerages, while stocks jumped in Taiwan on renewed hopes for the electronics sector. The dollar held Wednesday's gains against the yen and euro, as fresh economic data provided more evidence of a strengthening U.S. economy and investors got used to the idea that interest rates there were likely to rise gradually. Oil prices climbed on concerns about pipeline bombings in Iraq and al Qaeda-linked attacks in Saudi Arabia. Tokyo's Nikkei share average <.N225> ended morning trade down 0.4 percent at 11,597.80. An MSCI index of shares elsewhere in the region <.MSCIAPJ> was down 0.2 percent at around 0215 GMT. "The selling is a knee-jerk reaction to the rally yesterday," said Masayoshi Okamoto, head of dealing at Japan's Jujiya Securities.
Brokerage Nomura Holdings <8604.T> and its peers were among the hardest hit as the sector had led the Tokyo market higher on Wednesday. Nomura fell 1.4 percent. Taiwan's TAIEX share index <.TWII> rose 2.3 percent, bouncing from a one-month low, on easing concerns over the economic outlook and the ability of companies to repay debt. Electronic components maker Procomp Informastics <2398.TW> said earlier this week it was unable to pay back T$2.98 billion in debt, raising worries over cash-flow problems at other firms. "Some people thought that Procomp was an isolated case and investors overreacted to it yesterday, so tech and financial shares regained momentum today," said Albert Lin, vice president at Hotung Securities.
SCREEN MAKERS SURGE
Screen maker AU Optronics <2409.TW> was the most active issue and surged the daily seven percent limit, as did rival Chi Mei <3009.TW>. Stock benchmarks elsewhere were down by 0.4 percent in Singapore <.STI>, by 0.3 percent in Hong Kong <.HSI> and by 0.2 percent in South Korea <.KS11>, but Australia <.AXJO> gained 0.4 percent. Australian Copper miner WMC Resources jumped 2.1 percent on fresh bets that it could be a takeover target after Canadian rival Noranda Inc said it was weighing "several expressions of interest" from potential buyers. U.S. stocks ended nearly unchanged and Treasury prices eased on Wednesday as the cheering effect of some positive economic reports was offset by worry over world oil supply after attacks on Iraqi pipelines. The Dow Jones industrial average <.DJI> closed flat at 10,379.58, while the Nasdaq Composite Index <.IXIC> rose 0.1 percent to 1,998.23. Ford Motor Co shares rose 1.5 percent after Wednesday's close, on news the car maker had raised its full-year and second-quarter earnings estimates by 15 cents per share, citing strong results from its finance arm. The government reported on Wednesday that U.S. housing data beat forecasts in May, with prospects of rising interest rates no drag on demand. Another report said industrial production posted its biggest monthly gain in almost six years.
DOLLAR SEEN SOFTENING
Despite the upbeat data, analysts expect the dollar to soften when the U.S. Federal Reserve finally raises rates. "Now we are waiting for a 25 basis point hike on June 30, so if that happens the dollar is likely to go lower," said Tohru Sasaki, chief forex strategist at JP Morgan Chase in Tokyo. The dollar was just below $1.20 per euro , hardly changed from late trade in the United States, where it rose about 1.3 percent from a day earlier. The dollar fetched around 110.10 yen after rising about 0.5 percent to 110.00 yen in New York. U.S. Treasuries were steady in Asian trade, but Japanese government bond (JGB) prices gained as investors grew optimistic about likely demand at a bond auction. The benchmark 10-year JGB yield <0#JPTSY=JBTC> stood at 1.865 percent, down one basis points from Wednesday, after briefly rising to 1.88 percent, a level not seen since September 2000. U.S. oil was up a third of a percent at $37.45 a barrel. Gold was unchanged at $383.70.///