Most Asian markets advance modestly amid high oil prices

The Associated Press ,  Bangkok   |  Mon, 05/19/2008 9:45 PM  |  Headlines

Most Asian markets advanced modestly Monday, with rising oil prices leading investors to snap up energy and resource companies. The oil-led gains lifted Tokyo's benchmark index to a four-month high and boosted the Hang Sng in Hong Kong.

The Nikkei 225 index rose 0.4 percent to 14,269.6 points, its highest close since Jan. 10. The Hang Seng Index rose 0.5 percent to 25,742.2. Chinese coal producers led the way in the territory after Goldman Sachs upgraded the sector.

The benchmark Shanghai Composite Index, meanwhile, fll 0.5 percent to 3,604.8. Trading was thin in China, with investors staying on the sidelines as the country observes a three-day
mourning period for victims of last week's earthquake.

In Tokyo, high oil prices buoyed mining and oil shares. Inpex Holdings rose 5.3 percent and Nippon Oil climbed 3.6 percent.

Steel isues also gained on hopes that shipbuilders may agree to a hike in steel prices. The Nikkei business newspaper reported Monday that Nippon Steel has reached a basic agreement with Mitsubishi Heavy Industries to raise the price of steel plate for shipbuilding by 40 percent. Nippon Steel climbed 5 percent.

A tronger dollar could also further help positive momentum after the Nikkei's recent gains, Mamoru Maeda, a strategist at Chuo Securities said. "A rise in high-tech shares may be a driver," he added.

But the dollar weakened as trading progressed, falling to 103.66 yen from 104.04 yen late Friday in New Yor. The euro dropped to US$1.5585 from US$1.5596.

In Hong Kong, Shenhua Energy led the day's blue-chip gains, rising 6.9 percent after Goldman Sachs added the company to its conviction buy list. The investment bank said higher oil prices
could strengthen demand for coal.

"With oil price making new high, we see coal entering a value territory," Goldman said in its report.

Goldman also upgraded Yanzhou Coal and China Coal. Yanzhou Coal jumped 5.6 percent; China Coal advanced 5.3 percent.

Late Monday in electronic trading on the New York Mercantile Exchange, light, sweet crude for June delivery climbe back above US$127 a barrel after dipping as low as US$125.56 earlier.

The front-month contract topped US$127 for the first time at the end of last week in New York, posting its eighth record in 10 sessions.

Chinese commodities producers listed in Hong Kong also gained as traders bet the resources sector could see greater demand due to reconstruction efforts after the earthquake.

China Molybdenum surged 13.5 percent, Anhui Conch rose 4.7 percent and Jiangxi Copper gained 3.8 percent.

Among local blue chips, property develoers rose on reports of strong sales at several residential projects under development, analysts said. Cheung Kong rose 1.6 percent and Sino Land increased 1.7 percent.

Sun Hung Kai Properties, however, lost more ground amid a power struggle between the brothers who control the company. Its shares fell 1.1 percent.

In mainland China, "trading incentives are not very strong today, as investors are in a low mood because of the earthquake," said Chen Huiqin at Huatai Securities.

The Shenzhen Composite Index fell 0.4 percent to 1,120.24.

Trading on the country's two stock exchanges halted briefly Monday afternoon as the country marked the one-week anniversary of the 7.9 magnitude quake that struck central China's Sichuan province last week, killing more than 32,000 people.

Cement and pharmaceutical stocks rose on expectations of higher demand from quake-related reconstruction and rescue efforts. Huaxin Cement rose the daily 10 percent limit.

But Chinese banks were lower, with a hike in the required reserve ratio due to take effect Tuesday.

Elsewhere, Australian shares rose for the fourth consecutive day, led by BHP Billiton and Woodside Petroleum after crude oil prices climbed. The S&P/ASX 200 index was up 0.3 percent at 5,949.4.

Stock benchmarks also rose in New Zealand, Taiwan and Indonesia.

Financial markets in India, Malaysia, Singapore and Thailand were closed Monday for public holidays. (***)

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