Interest Rates Stable In December 2009, Says Bank Negara

The daily weighted average overnight interbank rate moved within a narrow range of 1.99 to 2.00 per cent during the Dec 1, 2009, to Jan 27, 2010, period.

Interbank rates of other maturities were also relatively stable, said Bank Negara Malaysia in its Monetary and Financial Developments for December 2009 report released Thursday.

The central bank said the average fixed deposit rates of commercial banks were unchanged between December and January.

As at Jan 15, the average quoted fixed deposit rates for tenures between one and 12 months were within the range of 2.00 and 2.50 per cent, Bank Negara said.

In terms of the commercial banks' lending rates, the average base lending rate (BLR) was unchanged at 5.51 per cent as at Jan 15 while the average lending rate (ALR) trended lower to 4.83 per cent as at end-December compared with 4.91 per cent in November and 4.85 per cent in October, it said.

Bank Negara said the ringgit depreciated by 1.0 per cent against the US dollar from Dec 1 to Jan 27 but it appreciated against the euro by 6.0 per cent, the Japanese yen by 1.9 per cent and the pound sterling by 1.8 per cent.

The euro depreciated against most currencies due to concerns over sovereign-credit issues in Greece, the central bank said.

Against regional currencies, the ringgit appreciated against the Singapore dollar by 0.5 per cent but it depreciated against other regional currencies by between 1.0 and 1.8 per cent.

Dow plunges for second straight day

NEW YORK: The Dow blue chip index plunged more than 200 points for a second straight day on Friday amid concerns over US President Barack Obama’s bank revamp plans and doubts on Federal Reserve chief Ben Bernanke’s renomination.

The Dow Jones Industrial Average slumped 216.90 points (2.09 per cent) to 10,172.98, posting its third straight session of triple digit losses and its biggest weekly drop since February 2009.

The Nasdaq composite tumbled 60.14 points (2.67 per cent) to 2,205.29 and the Standard & Poor’s 500 index dropped 24.72 points (2.21 per cent) to 1,091.76.

Investors sold ahead of the weekend as the financial sector vociferously opposed Obama’s plans unveiled Thursday to limit the size and scope of US banks and finance firms in a new offensive against Wall Street excesses.

The measures would effectively force financial firms to choose between lucrative proprietary activities — trading in stocks and sometimes risky financial instruments for their own benefit — and traditional activities, like making loans and collecting deposits.

Analysts said the stock selloff over the last two days underscored market concerns.

“The president might be on the right warpath to soothe the American public, yet the market is telling him to be careful about using regulatory weapons of mass destruction,” said Patrick O’Hare of Briefing.com.

“What we see in front of us is a market that doesn’t like the idea of excessive regulation since excessive regulation curtails earnings potential,” he said.

Also Friday, doubts grew over Bernanke’s renomination as key Democrats voiced opposition, prompting a renewed expression of support from the White House.

“If he is not reappointed I think the markets would have a fit. Already we have seen that in the markets...what has happened in the last couple of hours is related to the events around Bernanke,” said Nariman Behravesh, chief economist at IHS Global Insight.

Two members of Obama’s party announced they would vote against Bernanke, underscoring a shift in the political landscape after the loss of a seat in Massachusetts that ended the Senate supermajority for the party.

Obama believes the Senate will confirm Bernanke, a White House spokesman told reporters traveling with the president en route to Ohio.

Beijing’s moves to clamp down on lending to cool an overheating Chinese economy also dragged down the market amid concerns over possible easing of the the global economic recovery from recession.
“Frankly, we see China tightening as the biggest factor at work this week. Its actions are highlighting for market participants that the easy money that fueled the 2009 rebound is going to be less easy to get in 2010,” O’Hare said.

“Naturally, this has to take some wind out of risk trades.” -- AFP

OSK-UOB: FBM KLCI may rise by 15pc this year

OSK-UOB Unit Trust Management says While it believes that the market is set to become more volatile, the benchmark index is still on the uptrend

OSK-UOB Unit Trust Management Bhd said the stock market's benchmark index could still rise by another 15 per cent this year, enhanced by government spending under its stimulus plan.

"The rise in KLCI has been relatively gradual. While we believe that market is set to become more volatile, KLCI is still on the uptrend," said OSK-UOB Unit Trust Management chief executive officer Ho Seng Yee.

The FBM KLCI rose 45 per cent in 2009 as investors bet the economy would recover this year.

"Oil and gas sector should continue to see more robust activities as crude oil prices remain buoyant. Bank Negara Malaysia has kept interest rates low and this has resulted in resilient consumer spending.

"We expect domestic spending to continue contributing to our economy," he told reporters after the launch of the OSK-UOB Asia Consumer Fund in Kuala Lumpur yesterday.

Yesterday, the KLCI traded 1.74 points higher to close at 1,308.36.

The OSK-UOB Asia Consumer Fund is offered at 50 sen per unit and the minimum take-up rate is RM1,000. The offer closes on February 7 2010.

"The fund is structured to achieve capital appreciation from investments in China and Hong Kong stocks whose businesses benefit from or are related to growth in consumer spending in Asia," Ho said.

Bank Negara Allows EONCap To Commence Merger Talks With Hong Leong Bank

EON Capital Bhd, the holding company of EON Bank Group, has received Bank Negara Malaysia (BNM) approval to start merger talks with Hong Leong Bank Bhd (HLBB).

"BNM has, vide its letter dated Jan 19, 2010, no objection for EON Capital to commence negotiations with HLBB for the potential divestment of the assets and liabilities of EON Capital and EON Bank including EON Capital's equity interest in EON Bank for the purpose of merging the licensed entities under EON Capital Group with Hong Leong Bank Group."

"The approval to commence negotiations with HLBB is valid until June 30, 2010," EON Capital said in a filing to Bursa Malaysia on Wednesday.

Yesterday, the company told Bursa Malaysia that it had, for itself and on behalf of its subsidiaries, submitted an application to BNM for approval for EON Capital and/or any of its subsidiaries to commence negotiations with potential third parties and their related corporations in Malaysia licensed under the Banking and Financial Institutions Act 1989 (BAFIA) and/or the Islamic Banking Act 1983.

According to the earlier statement, the approval sought relates to two options.

First, EON Capital directly and/or through any one of its subsidiaries undertaking a sale of EON Capital's assets and liabilities, including the equity interests in, and/or the assets and liabilities of, EON Bank, EONCap Islamic Bank Bhd and/or MIMB Investment Bank Bhd.

Second, EON Capital directly and/or through any of its subsidiaries acquiring at least five per cent of the interest in shares in, or merging with, or undertaking an acquisition, of the assets and liabilities of an existing entity in Malaysia licensed under BAFIA and/or the Islamic Banking Act.

The United Nations Conference on Trade and Development (UNCTAD) says the global flows in Foreign Direct Investment (FDI) dropped by about 40 per cent

The United Nations Conference on Trade and Development (UNCTAD) says the global flows in Foreign Direct Investment (FDI) dropped by about 40 per cent to US$1 trillion in 2009 from US$1.7 trillion in 2008.

UNCTAD indicated this in the "Monitor", its new quarterly publication and the second issue released Tuesday.

The organisation also reported that FDI flows remained relatively stable during the third quarter of 2009 but at a low level. No pick-up in FDI was detected in the fourth quarter.

"The overall decline in FDI for the year was widespread across all major groups of economies.

"After experiencing a severe reduction in 2008, FDI flows to developed countries continued to plummet,dropping by a further 41 per cent in 2009," UNCTAD said.

According to the UNCTAD,flows to developing and transition economies which rose in 2008,declined by 39 per cent in 2009 as the global financial and economic crisis continued to unfold.

It added that in terms of the mode of entry of FDIs, cross-border mergers and acquisitions were the most affected, as it decreased by 66 per cent in 2009 compared to the previous year.

Ringgit among fastest-rising currencies vs US dollar

PETALING JAYA: Having made steady headway since the start of the year, the ringgit was, for a change, among the fastest-rising currencies against the weak US dollar.

The local currency had risen 2.5% over the past two weeks, and was at 3.3395 as at 5pm yesterday. Earlier this week, the ringgit hit 3.3365 against the greenback – its strongest since August 2008.

The Korean won appreciated 3.6% year-to-date and was the biggest mover among all major currencies followed by the Australian dollar’s 3.26% advance during the same period.



“I think this will be a bearish year for the US dollar and for the ringgit, we see room for further appreciation,” OSK Investment Bank head of treasury Yeo Chin Tiong told StarBizWeek yesterday.

OSK Investment forecast that the ringgit would rise to 3.20 against the US dollar by the end of 2010. The local currency inched up 1% last year, lagging behind sharp advances made by almost all other regional currencies.

Signs that international investors still favour assets in emerging markets, which are recovering faster from the global economic slump last year than countries in the West, would keep demand high for Asian currencies.

Emerging market funds took in US$$2.5bil in net inflows in the week ended Jan 13, according to data released yesterday by US-based fund tracker EPFR Global.

“The inflows are going to lift Asian currencies, especially now that the market is looking at a delay in Fed hikes,” Hong Leong Bank manager of economic and fixed-income research Choong Yin Pheng was quoted by Bloomberg as saying yesterday.

“The ringgit has done well for a laggard.”

Analysts said the prospects of rising ringgit could further boost returns on investment for foreign investors.

Year-to-date, the benchmark FTSE Bursa Malaysia KL Composite Index had gained 2% to close at 1,298 points yesterday. If measured in US dollar terms, the return was higher at 5%.

Earlier this week, Standard Chartered Bank predicted the ringgit will reach 3.15 against the US dollar by the year-end.

Asian Markets End Higher On Recovery Hopes

The markets across Asia, excluding Hong Kong, ended in positive territory on increasing optimism about global economic recovery taking positive cues from Wall Street where the Dow ended at a 15-month high in the previous session. Profit taking at late trading however limited the gains as traders exercised caution ahead of earnings in the U.S.

In Japan, the benchmark Nikkei 225 Index rose 172.65 points, or 1.6%, to 10,908, while the broader Topix index of all First Section issues rose 14.99 points, or 1.6%, to 959.

On the economic front, data released by the Cabinet Office revealed that core machinery orders declined by a seasonally adjusted 11.3% month-over-month in November, following a 4.5% drop in the previous month. The data surprised economists who expected a bounce back in November with a marginal 0.2% gain. On an annual basis, core machinery orders plunged 20.5% during November, following a 21% contraction in the previous month. Economists expected the orders to decline 10.1% for the month, on annual basis.

In a separate report, the Bank of Japan revealed that an index measuring the prices of domestic corporate goods in the country rose 0.1% in December compared to the previous month. The index came in line with economists expectations, after having risen 0.1% in November. On annual basis, the domestic corporate goods index or CGPI declined 3.9% during December, in line with expectations, following 4.9% decline in the previous month.

Foreign institutional investors evinced fresh buying interest in blue-chip technology stocks in the Japanese market on optimism about better market performance from Japanese markets in the new year. As many as 189 stocks in the 225-stock benchmark Nikkei index ended in positive territory.

Among the major technology stocks, Sharp Corp. gained 3.15%, Sony Corp. rose 2.57%, and Panasonic Corp. surged up 6.10%.

Machinery stocks also ended higher. Okuma Corp. soared 13.64%, Chiyoda surged up 7.22%, Hitachi Construction Machinery advanced 1.64%, Sumitomo Heavy Industries gained 3.73% and Komatsu Limited gained 1.47%.

Trading companies also ended in positive territory. Mitsubishi Corp. climbed 4.35%, Mitsui & Co. rose 4.28%, Sumitomo Corp. gained 3.91% and Toyota Tsusho Corp. advanced 0.99%.

Among airline stocks, Japan Airlines surged up 28.57% as traders evinced buying interest for speculative purpose over this beleaguered airline company ahead of impending fear of delisting. As much as one-third of the total 3.2 billion listed shares, about 1.04 billion shares of JAL were traded in a single trading session. The other airline company, All Nippon Airways rose 1.74%.

Banks also ended in positive territory. Sumitomo Mitsui Financial climbed 3.32%, Resona Holdings rose 1.60%, Mizuho Financial surged up 5.68% and Mitsubishi UFJ Financial rose 2.09%.

In Australia, the benchmark S&P/ASX Index added 29.90 points, or 0.61% to close at 4,898, while the All-Ordinaries Index ended at 4,929, representing a gain of 29.30 points, or 0.60%.

On the economic front, data released by the Australian Bureau of Statistics revealed that the unemployment rate in the country declined by 0.1% in seasonally adjusted terms to 5.5% in December, fueling speculation that the Central Bank might continue to hike interest rates in its next meeting, if not earlier. According to the report, total employment in the country rose by 35,200 during December, following a rise of 31,200 in employment in the preceding month. Of the total 35,200 new jobs during December, 7,300 jobs were for full-time employment, while 27,900 jobs were created in part-time employment category.

Banking stocks advanced on positive economic data related to unemployment rate. ANZ Bank added 0.45%, Commonwealth Bank of Australia advanced 1.39%, National Australia Bank gained 0.86% and Westpac Banking rose 1.12%. Investment banker Macquarie Group was the major gainer in the session, having risen 3.70%.

Mining stocks also advanced on higher commodity prices in the international market. Rio Tinto reported a sharp increase in global iron-ore production for the fourth quarter. Also sales surged up in the quarter beating expectations. Following the news, the stock price of Rio Tinto climbed 2.63%. Among other mining and metal stocks, BHP Billiton advanced 1.53%, Fortescue Metals rose 3.33%, Gindalbie Metals added 1.25%, Iluka Resources surged up 4.57%, Minara Resources gained 1.23% and Murchison Metals increased 1.57%.

Mixed trading was witnessed among gold stocks. While Lihir Gold remained unchanged from previous close, Newcrest Mining ended in negative territory with a loss of 0.98%.

Oil stocks ended mixed. Woodside Petroleum slipped 0.33% and Santos shed 0.36%. However, Oil Search added 0.50% and Origin Energy edged up 0.23%.

Retail stocks also ended mixed. David Jones remained unchanged from previous close. JB Hi-Fi Ltd rose 1.82% and Woolworths Ltd advanced 0.79%. However, Harvey Norman fell 1.53% and Wesfarmers slipped 0.26%.

In Hong Kong, the Hang Seng Index ended in negative territory with a marginal loss of 31.65 points, or 0.15%, at 21,717, led by profit taking in late trading session, especially among the property stocks. The market, which had declined in the previous session dragged down on Chinese banks, opened in positive territory taking cues from other Asian markets and rose to as high as 21,989 in morning session. However, profit taking by traders, especially in property related stocks ahead of key data in the US and earnings from Intel, erased the early gains. Property stocks and banks ended in the negative territory.

In South Korea, the KOSPI Index ended in positive territory with a gain of 14.36 points, or 0.86%, at 1,686, taking cues from other markets in the region as well as positive closing on Wall Street in the previous session. Overcoming the anxiety over derailing of global recovery over China's tightening of monetary policy, the stocks advanced higher as foreign institutional investors evinced fresh buying interest in technology stocks and shipping stocks on optimism about sustaining recovery momentum in global economy.

The Indian market extended gains for the second successive day on Thursday, taking cues from positive trading in other Asian markets as well as the positive closing on Wall Street in the previous session. Mid and small cap companies led the gains on increasing confidence about the economy despite an uptick in the monthly inflation data released during the day. The benchmark Sensex finished at 17,585, with a gain of 75.07 points, or 0.43%, and the Nifty gained 0.50%, or 25.95 points to close at 5,260.

Among other major markets open for trading in the region, Taiwan's Weighted Index rose 93.42 points, or 1.14% to close at 8,299, Straits Times Index in Singapore added 21.14 points, or 0.73%, to close at 2,910, Indonesia's Jakarta Composite Index advanced 12.31 points, or 0.47% to close at 2,645, and China's Shanghai Composite Index jumped 42.89 points, or 1.35%, to close at 3,216.

Asian Markets Slump On China's Decision, Concerns About Recovery

The markets across Asia, excluding India, ended in negative territory on Wednesday, reacting to the decision of the Chinese central bank to tighten the monetary policy by hiking the reserve requirements by 0.5% in an effort to cool off the growth momentum and rein in inflation. Concerns that global economic recovery might be derailed as well as softer commodity prices impacted market sentiment as traders preferred to lock in gains from recent rally and moved to the sidelines.

In Japan, the benchmark Nikkei 225 Index lost 144.11 points, or 1.32% to 10,735, while the broader Topix index of all First Section issues was down 10.11 points, or 1.06% to 944.

On the economic front, data released by Japan Machine Tool Builders' Association revealed that machine tool orders recovered strongly in December after steep falls in the past several months. According to the report, total orders for Japan-made machine tools surged up 62.8% year-on-year in December, following a 8.4% drop in the previous month.

Light sweet crude oil futures for February delivery ended at $80.09 a barrel in electronic trading, down $0.70 per barrel from previous close at $80.79 a barrel in New York on Tuesday.

Most of the stocks across the sectors ended in negative territory as traders availed the opportunity to unload shares related to China and also booked profits amid concerns that the stock market is getting overheated following recent gains.

Airlines were the major losers with the beleaguered Japan Airlines losing as much as 81.0.8% on huge volumes on concerns about looming insolvency filing and subsequent delisting from the market. The other airline company, All Nippon Airways, shed 2.37%.

Among machinery stocks, Daikin Industries lost 2.43%, Hitachi Construction Machinery slipped 2.34%, Komatsu Limited fell 2.86%, Kubota Corp. shed 2.67% and Japan Steel Works declined 2.44%.

Trading companies also ended in negative territory. Mitsubishi Corp. slumped 3.55%, Mitsui & Co. shed 3.71%, Toyota Tsusho Corp. declined 2.61%, Sumitomo Corp. fell 1.73% and Marubeni Corp. lost 1.83%.

Automotive stocks also slipped on profit taking. Toyota Motor Corp. lost 1.46%, Suzuki Motor slipped 1.11%, Nissan Motor fell 2.79%, and Honda Motor edged down 0.30%.

Bank stocks ended in negative territory. Sumitomo Mitsui Financial shed 2.43%, Mitsubishi UFJ Financial lost 1.84%, Resona Holdings fell 1.18% and Mizuho Financial slipped 0.56%.

In Australia, the benchmark S&P/ASX Index shed 31.40 points, or 0.64% to close at 4,868, while the All-Ordinaries Index ended at 4,900, representing a loss of 31.50 points, or 0.64%.

On the economic front, a report released by the Department of Education, Employment and Workplace Relations revealed that the country's monthly leading indicator of employment index rose to minus 0.716 in January from minus 0.743 reported in December. The rise in January was the seventh successive increase, after having declined for 18 consecutive months, confirming the prediction that employment is likely to grow more quickly than its long-term trend rate of 1.8%.

Light sweet crude oil futures for February delivery ended at $80.09 a barrel in electronic trading, down $0.70 per barrel from previous close at $80.79 a barrel in New York on Tuesday.

Mining and metal stocks ended in negative territory following drop in base metal prices in the international market. BHP Billiton declined 0.65%, Rio Tinto fell 1.60%, Fortescue Metals lost 1.92%, Gindalbie Metals slumped 5.14%, Iluka Resources declined 5.91%, Macarthur Coal slipped 0.94%, Murchison Metals shed 5.94% and Oz Minerals dropped 2.02%.

Oil stocks also ended weaker. Woodside Petroleum edged down 0.10%, Santos slumped 2.94%, Oil Search slipped 0.33% and Origin Energy shed 0.97%.

Gold stocks also ended lower after bullion prices declined sharply in the bullion market. Lihir Gold lost 2.34% and Newcrest Mining shed 1.18%.

Worley Parsons was the major loser in the market. The engineering and maintenance group company has lowered the profit guidance for full year 2010 citing weaker conditions in the U.S as the primary reason. The stocks slumped 11.45% following the downward revision.

Banking stocks also ended in negative territory. Commonwealth Bank of Australia declined 0.99%, National Bank of Australia slipped 0.48% and Westpac Banking shed 0.32%. However, ANZ Bank bucked the trend and ended in positive territory with a gain of 0.18%.

In Hong Kong, the Hang Seng Index ended sharply losing 578.04 points, or 2.59%, and closed at 21,749, reacting to the surprise tightening of the monetary policy in mainland China. The Chinese central bank raised the reserve requirement by 50 basis points, effective January 18, primarily with the intention of cooling off the growth and reigning inflation. Fears that this measure might derail the global recovery process triggered selling led by major Chinese banks. Bank of China lost 3.62%, China Construction Bank fell 3.89% and ICBC declined 3.58%. Of the 42 components in the index, as many as 38 stocks ended in negative territory.

In South Korea, the KOSPI Index ended in negative territory with a loss of 27.23 points, or 1.60% at 1,671, taking cues from other markets in the region which also ended lower on concerns China's move to tighten monetary policy might derail global economic growth. Foreign institutional investors and traders unloaded stocks and moved to sidelines awaiting further direction. Weak closing on Wall Street in the previous session also impacted market sentiment.

The Indian market reversed its early loss and ended moderately higher on Wednesday, shrugging off weak global cues and fears about a surprise monetary tightening in China. The People Bank of China on Tuesday raised banks' reserve requirements by 50 basis points effective January 18, sparking concerns that the move may dampen a nascent economic recovery. The Reserve Bank of India is set to review its monetary policy on Jan 29. There is an expectation that the central bank may follow suit to rein in inflationary expectations. The benchmark Sensex opened gap-down and fell to a low of 17,277 before finishing higher at 17,510, up 87 points or 0.50%, and the Nifty rose 24 points or 0.45% to 5,234.

Among other major markets open for trading in the region, Taiwan's Weighted Index lost 112.81 points, or 1.36% to close at 8,197, Straits Times Index in Singapore fell 27.73 points, or 0.95%, to close at 2,888, Indonesia's Jakarta Composite Index shed 26.68 points, or 1.00% to close at 2,633, and China's Shanghai Composite Index slumped 101.31 points, or 3.09%, to close at 3,173.

US Market:Sentiment May Remain Subdued Due to Uncertainty

The major U.S. index futures little changed on Wednesday, reflecting the indecision of traders. Traders are likely to remain cautious as they look ahead to some key economic reports that can improve the visibility on the economic environment. A private sector employment report released earlier in the day showed a decline in the rate of job losses, which was more or less in line with expectations of economists. The resurgence in the value of the dollar is keeping a lid on commodity prices. Particularly oil is expected to show some volatility amid the release of the EIA’s weekly inventory report. The results of the ISM’s services survey and the minutes of the December FOMC meeting could also influence trading in today’s session.

U.S. stocks ended on a mixed note on Tuesday following a decent run up in the previous session, as traders preferred to stay on sidelines amid caution ahead of a slew of first-tier economic reports to be released over the course of the rest of the week. Additionally, a sharp drop in the pending home sales index also weighed on sentiment. Volume of trading was light, with merely 2.49 billion shares exchanging hands.

The Dow Industrials opened slightly higher, but it immediately dipped below the unchanged line and languished in negative territory for the rest of the session. The 30-stock index closed down 11.94 points or 0.11% at 10,572. After showing a lack of direction for much of the session, moving back and forth across the unchanged line, the S&P 500 Index and the Nasdaq Composite ended higher for the day. While the S&P 500 Index advanced 3.53 points or 0.31% to 1,137, the Nasdaq Composite Index gained merely 0.29 points or 0.01% to 2,309.

Sixteen of the thirty Dow components closed the session lower, with Alcoa (AA), DuPont (DD), IBM (IBM), Pfizer (PFE), Wal-Mart Stores (WMT), Johnson & Johnson (JNJ) and Coca-Cola (KO) leading the slide. On the other hand, Kraft Foods (KFT) rallied close to 5% and JP Morgan Chase advanced about 2%. Bank of America (BAC) and Boeing (BA) both rose over 3%.

Among the sector indexes, the Dow Jones Utilities Average fell 1.03%. However, the NYSE Arca Airline Index surged up 5.21% and the Dow Jones Transportation Average gained 1.01%. The Philadelphia Oil Service Index ended up 2.06% compared to a more modest 1.03% advance by the NYSE Arca Gold Bugs Index. The Philadelphia Housing Sector Index rose 1.12%, while the KBW Bank Index rallied 2.24%.

On the economic front, the National Association of Realtors reported that the pending home sales index for November, a leading indicator for existing home sales, declined 16% month-over-month. Economists had expected a more modest decline of 2%. The decline is apparently the pay back phenomena from the first time homebuyers’ credit, which motivated homebuyers to bring forward their purchases to meet the earlier expiry deadline of November 30th. The stimulus measure has since then been extended.

After showing decent gains in the past three months, the Northeast, Midwest and South showed sharp declines. On a year-over-year basis, the index rose 19.3%, although much of the increase was due to easier comparisons. Meanwhile, factory goods orders rose a better than expected 1.1% in November.

Asian Markets End In Positive Territory

The markets across Asia ended in positive territory but well off the highs in the second trading session on Tuesday, encouraged by the sharp gains on Wall Street in the previous session. Higher commodity prices also lifted market sentiment with resource stocks leading the gains.

In Japan, the benchmark Nikkei-225 Index added 27.04 points, or 0.3%, to 10,682, while the broader Topix index of all First Section issues was added 3.82 points, or 0.4%, to 920.

On the economic front, the Bank of Japan revealed that the monetary base in the country rose 5.2% year-over-year during December, following an year-over-year rise of 3.8% in the month of November. The central bank further noted that banknotes in circulation were down an annual 0.3%, while coins in circulation fell 0.7% on year. The current account balance was up 53.6%, including a 47.4% annual increase in reserve balances.

In a separate statement, the the Japan Automobile Dealers Association said auto sales increased for the fifth consecutive month in December. Domestic sales of new cars, trucks and buses increased 36.5% year-on-year in December. Automobile sales totaled 250,474 units in December, larger than 183,549 recorded in December 2008. However, for the calendar year 2009, automobile sales declined 9.1% to 2.92 million vehicles

Commodity related stocks led the gains on higher commodity prices in the international market. Impex, the oil exploration company, rose 1.82%. Nippon Oil Corp. surged up 7.39% and Nippon Mining Holdings soared 7.25%. Showa Shell climbed 1.84%.

Among trading companies, Mitsubishi Corp. advanced 2.50%, Mitsui & Co. climbed 2.85%, Itochu Corp. rose 2.45%, Marubeni Corp. gained 2.66%, Sumitomo Corp. added 1.24% and Toyota Tsusho Corp. edged up 0.43%.

Banks also ended in positive territory after Sumitomo Mitsui Financial announced that it would raise only 800 million yen to replenish the capital, lower than earlier expection of capital raising in excess of 1 trillion yen. The shares of Sumitomo Mitsui Financial advanced 1.45%. Among other large banks, Mizuho Financial rose 1.23% and Mitsubishi UFJ Financial added 0.22%, on relatively large volumes. However, Resona Holdings bucked the trend and ended in negative territory with a loss of 0.21%.

Automotive stocks ended in negative territory, offsetting the early gains in the market partly, following strengthening of the local currency against the US dollar. Toyota Motor Corp. declined 2.19%, Suzuki Motor fell 1.78%, Honda Motor slipped 0.79%, Hino Motors shed 0.93% and Mitsubishi Motor declined 1.53%.

In Australia, the benchmark S&P/ASX Index advanced 48.00 points, or 0.98% to close at 4,924, while the All-Ordinaries Index ended at 4,839, representing a gain of 49.70 points, or 1.02%.

On the economic front, survey results released by Australia's Housing Industry Association revealed a modest increase in new home sales for the month of November, reversing the unexpected slump in October. The results revealed that new homes sales rose 0.3% during November from October.

Mining and metal stocks led the gains on higher commodity prices. BHP Billiton added 0.46%, Fortescue Metals gained 2.45%, Gindalbie Metals surged up 6.48%, Iluka Resources rose 3.62%, Macarthur Coal climbed 3.00%, Oz Minerals soared 5.00% and Rio Tinto advanced 1.91%.

Oil stocks also ended in positive territory after crude oil prices surpassed the $81 a barrel mark in the international market. Woodside Petroleum advanced 0.93%, Santos gained 1.47%, Oil Search added 0.33% and Origin Energy climbed 2.80%.

Gold stocks also gained on higher bullion prices. Lihir Gold gained 1.52% and Newcrest Mining rose 2.00%%.

Banking stocks also advanced on increasing optimism about global recovery. ANZ Bank added 0.48%, Commonwealth Bank of Australia gained 1.51%, National Australia Bank rose 1.28% and Westpac Banking Corp. advanced 0.83%. Investment banker Macquarie Group climbed 1.93%.

Retail stocks were the laggards in the market having ended mixed after Harvey Norman was downgraded by JP Morgan. David Jones fell 1.32%, Harvey Norman slumped 2.94%, JB Hi-Fi fell 2.19% and Woolworths slipped 0.60%. However, Wesfarmers bucked the trend and ended in positive territory with a gain of 1.31%.

In Hong Kong, the Hang Seng Index ended sharply higher with a gain of 456.30 points, or 2.09%, at 22,280, primarily led by resource related stocks on higher commodity prices in the international market. Positive closing on Wall Street in the previous session on increasing optimism about economic recovery also lifted market sentiment with risk appetite returning to the market. As many as 37 of the 42 components in the index ended in positive territory. Aluminum Company of China or CHALCO surged up 9.08%, while CNOOC climbed 5.72% and PetroChina soared 5.92%.

In South Korea, the KOSPI Index ended in negative territory with a marginal loss of 5.52 points, or 0.33%, at 1,69, as traders preferred to lock in gains following recent gains and move to sidelines awaiting further data. Automotive stocks were the major draggers in the market on strengthening local currency, Korean Won, as a stronger local currency reduces the export sales realizations in local currency on conversion. Liquidity concerns related to Kumho Asiana Group also impacted market sentiment.

A return in risk appetite amid improving corporate earnings outlook along with a rally in the U.S and the European markets overnight lifted the Indian market notably higher on Tuesday. Metal stocks outperformed tracking gains among their global peers on the back of higher commodity prices, followed by high-beta realty and telecom stocks, but profit taking in the auto sector limited large gains in the frontline indexes. The benchmark Sensex finished at 17,686, up 128 points or 0.73% and the Nifty rose by 46 points or 0.87% to 5,278.

Among other major markets open for trading in the region, Indonesia's Jakarta Composite Index advanced 29.86 points, or 1.16% to close at 2,605, Taiwan's Weighted Index edged up 3.55 points, or 0.04% to close at 8,211, Straits Times Index in Singapore gained 25.73 points, or 0.89%, to close at 2,920, and China's Shanghai Composite Index rose 38.42 points, or 1.18%, to close at 3,283.

US Market: Traders Look Ahead to Manufacturing Data Amid Cautious Optimism

The major U.S. index futures are pointing to a higher opening on Monday, as signs of a global economic recovery has generated optimism concerning demand for commodities. Manufacturing activity in Europe and Asia has rebounded nicely, adding to recent evidence that growth is solidifying. Additionally, oil is advancing, as cooler than usual winter weather has improved demand outlook for the black gold. That said, traders may exercise caution ahead of several key economic reports to be released over the course of the week.

U.S. stocks gave back some ground in the holiday-shortened week ended December 31st, as uncertainty intensified, given the fluid state of the economy and the run up for most of the past year that created uneasiness among traders.

Amid uncertainty last Monday, the major averages closed modestly higher, with the upside aided by the early momentum built on the back of news suggesting strong holiday sales and positive economic data from Asia. However, the 6-day winning stint led to some profit taking on Tuesday, as stock retreated modestly.

Stocks continued to show a lack of direction on Wednesday despite the release of upbeat manufacturing data from the Chicago region. After showing choppiness, the major averages closed slightly higher.

Although an unexpected decline in weekly jobless claims helped the major averages open little changed on Thursday, selling pressure emerged thereafter, causing the averages to decline steadily throughout most of the session. In late trading, the selling pressure intensified, sending the major averages down by about 1% each.


For the week, the Dow Industrials ended down 0.88%, the S&P 500 Index lost 1.01% and the Nasdaq Composite slid 0.72%.

Among the sector indexes, the Dow Jones Transportation Average, the NYSE Arca Airline Index and the Philadelphia Housing Sector Index lost over 2% each, while the NYSE Arca Gold Bugs Index receded close to 2%. The NYSE Arca Securities Broker/Dealer Index, the KBW Bank Index and the Philadelphia Oil Service Index all moved down over 1%.