Asian stocks rattled ahead of Bernanke's speech

Asian stock markets were unsteady on Friday as investors waited to see whether United States Federal Reserve chairperson Ben Bernanke would promise new steps to help the US economy ward off another recession.

Oil prices lingered above $85 a barrel while the dollar was down against the yen and the euro.

Japan’s Nikkei 225 swung between gains and losses before hitting a plateau at 8 769.77. Hong Kong’s Hang Seng gave up early gains and dipped 0.2% to 19 710.07 while Australia’s S&P/ASX 200 was 0.2% lower at 4 204.80. South Korea’s Kospi rose 0.3% after a volatile morning to 1 770.03.

Trading was jittery as investors waited to see if Bernanke offered more support for the US economy when he delivers a highly anticipated speech at a conference later on Friday in Jackson Hole, Wyoming.

The Fed has already pledged low interest rates through to 2013.
Some central bank watchers say the Fed has already reached the limits of what a central bank should do to aid an economy that is beleaguered by problems that monetary policy can’t fix—high unemployment and massive government debt.

“The market is very volatile on low trading volume. Any news can be a big thing,” said Jackson Wong, vice-president at Tanrich Securities in Hong Kong.

Double-dip worries
Worries that the US could be headed for another recession have in recent weeks caused huge volatility in equities, bonds and foreign exchange.

Some shares weakened on the heels of disappointing earnings reports. Air China slid 3.1% after the company on Friday announced its first-half profit fell 12% as soaring fuel costs offset strong revenue growth.

PetroChina, China’s biggest oil and gas company, dropped 1.8%, a day after the company said its first-half profit was nearly flat as losses in its refining business eroded gains from higher oil and gas output.

But bank stocks got a boost after billionaire investor Warren Buffett said he would invest $5-billion in the troubled Bank of America, the largest US bank.

Industrial & Commercial Bank of China, the world’s biggest bank by market value, jumped 3.5%. Japan’s Mitsubishi UFJ Financial Group gained 0.3%.

In Europe on Thursday, debate continued about the best way to resolve severe debt problems in several countries. Germany’s main stock index, the DAX, plummeted 4% within 20 minutes before paring its losses and closing down 1.7%.

Rising unemployment
The sudden move in one of Europe’s major markets—apparently due to unfounded rumours that Germany was about to ban short-selling—rattled investors and prompted some to buy gold, causing prices of the metal to rebound.

As a result, gold-related shares saw their prices rise. Australia’s biggest gold miner, Newcrest Mining, rose 0.4%.

On Thursday, the US government reported an increase in the number of people applying for unemployment benefits last week. The Labour Department said applications rose to 417 000, the highest in five weeks.

The Dow Jones industrial average closed down or 1.5% at 11,149.82. The S&P 500 fell 1.6% to 1,159.27. The Nasdaq fell 1.9% to 2,419.63.

In currency trade, the euro rose to $1.4416 from $1.4368 late in New York on Thursday. The dollar slipped to 77.27 yen from 77.55 yen.

Benchmark oil for October delivery was down 21 cents to $85.09 in electronic trading on the New York Mercantile Exchange. Crude rose 14 cents to finish at $85.30 on Thursday. In London, Brent crude for October delivery was up 7 cents to $110.69 on the ICE Futures exchange.—Sapa-AP

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