Tokyo shares fell on Tuesday as high oil prices and security fears weighed on Japanese exporters, but other Asian stock markets were upbeat. The dollar found support after solid U.S. manufacturing data reinforced the view that any softening in the U.S. economy would be temporary. Oil slipped 7 cents to $43.75 a barrel as investors locked in profits. Prices had hit 21-year highs on Monday. Analysts expected the market to resume its uptrend on lingering supply concerns. Gold was steady, while Japanese bonds were firm ahead of an auction of 10-year bonds. Most Asian stock markets rose -- Hong Kong by more than 1 percent -- after gains on Wall Street based on the solid manufacturing data and strong earnings.
Tokyo's Nikkei stock average <.N225> bucked the trend to drop 0.7 percent by midday to 11,148.26. Toyota Motor Co. <7203.T> fell 1.4 percent ahead of an earnings result due to be posted later on Tuesday. "What I'm concerned about most is higher oil prices and how that will affect corporate earnings both at home and overseas," said Takahiko Murai, general manager of equities at Nozomi Securities. "As long as there are geopolitical risks and oil prices stay high, investors' appetite (towards stocks) will likely remain weak, especially for exporters." MSCI's broadest index of Asia Pacific shares outside Japan <.MSCIAPJ> had risen 0.3 percent by 0220. Shares rose 1.1 percent in Hong Kong <.HSI> and about 0.3 percent in Australia <.AXJO> and Singapore <.STI>. South Korean shares <.KS11> climbed 0.6 percent from Monday's 10-month closing low.
EXPORTERS FALL
Among Japanese exporters, the country's biggest office machine maker, Canon <7751.T>, which generates about three quarters of sales overseas, fell 0.6 percent. Olympus Corp. <7733.T> tumbled 4.4 percent after the company posted an 88 percent fall in first-quarter group net profit on Monday due to sliding prices of digital cameras and more investment to bolster its endoscope operations. In Hong Kong, HSBS Holdings Plc. <0005.HK>, the world's third-largest lender by market value, jumped 2.6 percent after it reported a forecast-beating first-half profit of $9.37 billion on Monday. U.S. data showed the Institute for Supply Management's factory index rose to 62.0 in July from 61.1 in June, in line with market forecasts. Any reading above 50 indicates growth. the index has been above 50 for 14 straight months. The data helped lift the dollar after falls triggered by a weekend U.S. warning that al Qaeda may attack financial institutions such as the New York Stock Exchange and World Bank and weaker-than-expected economic growth figures last Friday. The dollar was trading at $1.2028 per euro versus $1.2025 in late U.S. trade. It had fallen at one point on Monday near to $1.21 per euro. The dollar was around 110.65 yen , little changed from 110.70 in late U.S trade and Monday's low of around 110.58 yen. Markets will now focus on the U.S. non-farm payrolls data on Friday to gauge the strength of the U.S. economy and the direction of interest rates. In U.S. equities, Procter & Gamble Co. , the maker of Head & Shoulders and scores of other household and personal care products, posted strong earnings and raised its outlook, helping push the Dow Jones industrial average <.DJI> up 0.39 percent. The tech-heavy Nasdaq composite <.IXIC> climbed 0.25. Japanese government bond prices were firm, with the yield on the benchmark 261st 10-year cash bond <0#JPTSY=JBTC> down 0.5 basis point at 1.875 percent. Spot gold was at $391.00 an ounce, against $391.90 last quoted in New York on Monday. ///