(Adds European open, updates prices)
By Tom Miles
HONG KONG, April 30 (Reuters) - Investors braced for a U.S.
interest rate decision on Wednesday but remained alert for any
value shares in the cheap market, snapping up Japanese
flat-panel TV maker Matsushita and Mitsubishi Steel after
robust earnings.
The U.S. Federal Reserve, which is widely expected to
announce another rate cut later on Wednesday (1815 GMT), could
also signal that its cutting cycle has run its course for now.
That could trouble firms counting on even cheaper borrowing
but it could also draw a line under the financial crisis, since
the Fed's rush to slash rates has reflected widespread investor
panic about the fragile health of the U.S. economy.
Financial markets were also awaiting U.S. gross domestic
product (GDP) data later in the day. According to a Reuters
poll, the report at 1330 GMT is expected to show the U.S.
economy braked sharply in the first quarter, growing at its
slowest pace in five years, as consumers curbed spending and
jobs disappeared. []
Although trading was muted ahead of the Fed, a few firms
flagged good prospects, sending their shares sharply higher.
Mitsubishi Steel Manufacturing Co <5632.T> leapt almost 13
percent and Panasonic maker Matsushita Electric Industrial Co
<6752.T> jumped 14.5 percent after they reported good results
and made confident forecasts of growing this year.
"If you look around the world, it's not all doom and gloom,
and the Beijing Olympic Games, which are the biggest business
chance for us, are coming up," said Matsushita President Fumio
Ohtsubo.
"I am fully aware of tough business conditions. But we
don't need to be overwhelmed by them."
Those buoyant stocks helped cushion the Nikkei average
index's <> 0.3 percent fall. Shares across the rest of
Asia <.MIAPJ0000PUS> were flat at 0619 GMT.
Financial bookmakers expected a mixed start to trading in
Europe, with London's FTSE 100 <> seen down 3-10 points,
the German DAX <> up 11-24 points and the French CAC 40
<> up 8-12 points.
Australia's benchmark S&P/ASX 200 index <> slipped 0.2
percent, but got support from two deals in the resources
sector, which has boomed as Asian demand outpaces supply of
energy and materials.
Power utility Origin Energy Ltd <ORG.AX> shot up 33 percent
after a A$13 billion ($12.1 billion) takeover proposal from
Britain's BG Group Plc <BG.L> at a 40 percent premium to
Tuesday's closing price. []
And Midwest Corp Ltd <MIS.AX> rose 2.3 percent to A$6.27
after recommending a revised A$1.36 billion ($1.27 billion)
offer from Chinese iron ore trader Sinosteel [].
China's main stock index <> rose 4.8 percent after
strong earnings from Ping An Insurance <601318.SS>. But Hong
Kong's Hang Seng <> drifted down 0.2 percent as investors
drew in their horns or headed off for Thursday's holiday.
Most major Asian markets except for Japan and Australia
will be closed for May 1 Labour Day holidays.
OIL SKIDS
The Fed is expected to trim rates by a quarter percentage
point to 2 percent, which would take its total rate cuts over
the past seven months to 3.25 percentage points, but may also
signal that its cutting cycle is done for now. []
The potential bottoming-out of the U.S. rate cycle, coupled
with rising inflationary concerns globally, caused a slump in
bond prices last week as investors suddenly changed their view
of the future path of interest rates.
But bleak U.S. consumer confidence and housing sector
[] data revived investors' appetite for U.S.
Treasuries [] on Tuesday, and Japanese government bonds
[] followed suit on Wednesday, taking additional support
from a weaker-than-expected reading on Japanese industrial
production.
June 10-year JGB futures rose 0.55 point to 136.15 <2JGBv1>
in light trade ahead of Japanese holidays early next week.
"The rise is nothing more than people covering short
positions. Speculation about negative growth for U.S. GDP due
later today may also be spurring short covering," said a trader
at a Japanese bank.
The prospect of a halt to interest rate cutting has put the
brakes on the sliding dollar, which held steady in Asian trade
on Wednesday after rising against the euro <EUR=> on Tuesday.
The dollar held steady around 104 yen but the Japanese
currency strengthen to 103.7 late in the session. The euro also
stood at around $1.557 before firming above $1.56 as European
markets opened.
The euro has fallen sharply since hitting a record $1.6018
last week. That dollar surge helped knock U.S. crude oil <CLc1>
back to $115.80 a barrel from last week's high close to $120.
"The dollar's movement is now the biggest factor in moving
oil prices rather than supply and demand," said Lee Moon-bae,
an analyst at Korea Energy and Economy Institute (KEEI).
Ahead of the Fed, traders will look to weekly U.S.
inventory data to see if gasoline stocks run even lower ahead
of the summer driving season and whether OPEC curbs hit crude
stocks. Analysts expect a 300,000 barrel rise in crude stocks
but a 700,000 barrel decrease in gasoline, according to a
Reuters poll [].
(Additional reporting by Chikako Mogi, Masayuki Kitano and
Eric Burroughs in TOKYO, Lewa Pardomuan in SINGAPORE, Joseph
Chaney in HONG KONG, Claire Zhang in SHANGHAI; Editing by Kim
Coghill)
