Asian stocks bounced in early trade on Wednesday after the strongest rally in the Dow Jones index since June, but gains were trimmed after an earthquake jolted northern Japan and chip-related stocks slumped. Japan's Nikkei index reversed course mid-morning and shed about 50 points after a tremor with a preliminary magnitude of 6.0 rattled the same area that was struck on Saturday. There were no immediate reports of new injuries but one building collapsed in Ojiya, about 250 km (155 miles) north of Tokyo. The U.S. dollar edged higher following the earthquake to 106.95 yen compared with 106.67 yen in late New York trade, while the euro fetched $1.2739, compared with $1.2759. The Nikkei stock average <.N225> ended the morning session flat at 10,671.28. Shares of some exporters such as Toyota Motor Corp. <7202.T> rose. But many chip-related stocks fell after the chairman of Taiwan Semiconductor Manufacturing Co. (TSMC) <2330.TW> warned of a "gloomy feeling" as the boom in consumer electronics demand softened.
"TSMC's comments at its investor conference were very conservative. They have reversed their optimistic outlook of three months ago without much explanation," said Maggie Chien, asset management consultant at Capital Investment Management. TSMC shares fell 1.9 percent in Taiwan. Retailers, media, banks and mining stocks pushed Australia's benchmark index <.AXJO> over 1 percent higher to an all-time record of 3,746.6. Gold slid to $425.25 an ounce, down from $426.05 in late New York trade after reaching a near 16-year peak on Monday. An MSCI index of Asia-Pacific shares outside Japan <.MSCIAPJ> rose 0.11 percent. Gains in its health care component <.MSCIAPJHC> were offset by the technology <.MSCIAPJIT> segment, which fell 1.36 percent.
OIL EASES
Crude oil prices eased 2 cents to $55.15 a barrel as traders focused on tight heating fuel stocks ahead of the northern hemisphere's winter. Forecasts for U.S. government inventory data, which will be released later in the day, called for a decline in distillate stocks, including heating oil. The U.S. dollar recovered from near-record lows against the euro. But many dealers said the gains could be short-lived, with plenty of dollar-negative factors accumulating. Benchmark stock indexes rose between 0.1 percent and 0.4 percent in Singapore <.STI> and Hong Kong <.HSI> but fell 0.7 to 0.9 percent in South Korea <.KS11> and Taiwan <.TWII>. Many traders and analysts said a key impetus for buying was improved sentiment after the strongest one-day rally in the Dow Jones index since early June. The Dow industrial average <.DJI> rose 1.42 percent to 9,888.48. The technology-laced Nasdaq Composite Index <.IXIC> advanced 0.77 percent to 1,928.79. The U.S. rally was led by a rise in interest-rate sensitive stocks and on expectations that an investigation into the insurance industry will be resolved quickly.
BONDS FALL
But underlying concern about the health of the U.S. economy hurt the bond market, with U.S. Treasury debt yields holding near seven-month lows after a measure of consumer sentiment in October fell more than expected. Japanese government bonds (JGBs) fell on Wednesday, with the yield on the benchmark 264th 10-year JGB <0#JPTSY=JBTC> rising 2 basis points to 1.440 percent. Investors also remained cautious ahead of the U.S. presidential election on Tuesday, with polls showing the electorate evenly divided, and many investors also concerned about a possible repeat of 2000's drawn-out conclusion. In Asian share trade, exporters rose, including Canon Inc. <7751.T>, up 0.59 percent, Toyota Motor Corp. <7203.T>, which moved 1.01 percent higher, and Fuji Photo Film <4901.T>, which advanced 1.12 percent. Attention also focused on companies set to announce first-half earnings, including Honda Motor Co. <7267.T>, Sharp Corp. <6753.T>, NEC Electronics Corp. <6723.T> and Nikko Cordial Corp. <8603.T>. Samsung Electronics Co. Ltd. <005930.KS> slid 1.05 percent, Taiwan's United Microelectronics Corp. <2303.TW>, TSMC's nearest rival, shed 2.02 percent ahead of its earnings. After the market closed on Tuesday, TSMC reported quarterly profits rose 84 percent to a record high. But the company warned the pullback in demand for consumer electronics would crimp sales in the current quarter, prompting Chairman Morris Chang to tell investors: "There is a gloomy feeling."///