Asian stock markets edged higher on Tuesday, underpinned by resource and financial companies, although rising oil prices reignited concerns about the economic impact of higher energy costs. LCD screen-maker Seiko Epson Corp. <6724.T> helped Tokyo's market after lifting its profit forecast, although other technology shares in Asia were mixed. South Korean steel giant POSCO <005490.KS> and Southeast Asia's biggest bank, DBS Group Holdings Ltd. of Singapore, were early gainers. Tokyo's Nikkei average <.N225> rose 0.27 percent to 11,572.31 in morning trade. Asian markets outside Japan were 0.37 percent firmer, according to an MSCI index <.MSCIAPJ>. Nikkei optimism generated by the bullish earnings outlook for Seiko Epson was partly offset by worries the ruling Liberal Democratic Party (LDP) was heading for a poor showing in upper house elections this Sunday, dealers said. "Such optimism is playing a tug-of-war with election concerns at this moment," said Yoshihiko Kosuga, an equities manager at Mizuho Investors Securities.
The dollar advanced against the yen on the political uncertainties, while the U.S. currency was steady against the euro. U.S. benchmark light crude prices were stronger on fresh worries about tighter global supplies following sabotage attacks on Iraqi pipelines and worries that oil cartel OPEC might not carry out a promised increase in supply in August. Fears Russia's fifth-biggest oil producer YUKOS , embroiled in an investigation into its taxes, might stop production this week added to the supply concerns. NYMEX crude for August delivery was trading up 1.67 percent at $39.03 per barrel. Wall Street markets did not trade on Monday, a holiday in the United States to mark Independence Day on July 4, offering Asian markets no leads on Tuesday.
POLITICAL WORRIES
Tokyo dealers said some stock investors were keeping to the sidelines owing to the concerns about waning voter support for the party of Prime Minister Junichiro Koizumi. "If the LDP loses at the election, then Koizumi would have even more trouble carrying out his reforms, which are opposed by many in his party. And if that happens, foreign players might cut their weighting of Japanese stocks," Mizuho's Kosuga said. Seiko Epson, the world's biggest maker of LCD screens for mobile phones, was untraded but prices had been marked 13 percent higher after it raised its annual profit forecast by 35 percent. The news boosted camera and office machinery maker Canon Inc. <7751.T> 1.41 percent. In other markets, the fortunes of technology companies were mixed. Taiwan Semiconductor Manufacturing Co. <2330.TW>, the world's biggest contract chip maker, was flat and Samsung Electronics Co. Ltd. <005930.KS>, the world's biggest memory chip maker, was down 0.45 percent.
An overnight rise in metals prices boosted the resources sector, helping to lift Australian <.AXJO> and South Korean <.KS11> indices by 0.37 percent and 0.13 percent, respectively. In Australia, BHP Billiton rose 1.2 percent and Rio Tinto gained 0.8 percent. South Korean index heavyweight POSCO, which announced a rise in domestic steel prices in June, rose 1.35 percent. DBS rose 0.68 percent on hopes for economic growth in Singapore. Banking shares were rebounding from recent losses in Korea, including Kookmin Bank <06000.KS>, which increased 0.57 percent. The dollar was trading at 109.70 , up slightly from 109.05 yen in late London trade and stronger than 108.67 yen in Asia on Monday. The euro fetched $1.2290 , down from London levels and below a day-earlier $1.2324. Spot gold was trading at $396.90 an ounce, down from more than $398 in London. Japanese government bond prices eased ahead of an auction of 1.9 trillion yen ($17.4 billion) of 10-year debt. The yield on the benchmark 260th 10-year JGB <0#JPTSY=JBTC> was half a basis point higher at 1.785 percent after reaching a three-week low on Monday of 1.75 percent.///