By Tom Miles
HONG KONG, Feb 13 (Reuters) - Equity markets rose on
Wednesday after billionaire investor Warren Buffett made an
offer to take on $800 billion of U.S. municipal bond risk, but
worries about the health of the U.S. economy continued to gnaw
away.
Buffett's plan eased fears for the health of the insurance
sector and lifted U.S. stocks on Tuesday, inspiring Asian
investors in turn. []
"The news of Buffett and the perception that markets are
hovering at a bottom are shoring up stocks," said Won
Jong-hyuk, an analyst at SK Securities in Seoul. "While there's
a consensus that the crisis is far from over, investors
nevertheless seem to think at the current price levels stocks
are worth buying."
Global investors are focused on one big question: the
chance of a U.S. recession, which could infect the global
economy and slow growth worldwide. For Asian companies, the
risk counts double, as a weaker dollar also spells a tougher
export market.
Since the start of the year, Asian stocks have fared worse
than U.S. shares, with MSCI's index of Asian stocks outside
Japan <.MIAPJ0000PUS> down about 13 percent against a fall of
about 7 percent in the Dow Jones industrial average <>.
The pan-Asian index was up 0.5 percent by 0244 GMT as
modest gains across the region outweighed a 2 percent fall in
Shanghai <>, which was catching up with global declines
after the week-long Lunar New Year holiday.
Japan's Nikkei average <> was up 1.4 percent.
RECESSION RISK
Buffett's offer eased fear of credit downgrades at U.S.
bond insurers forcing the sale of billions of dollars of
municipal debt and curbed the risk aversion bid that has stoked
a U.S. government bond market rally for much of the past seven
months.
Japanese government bonds [] edged lower while insurers
such as Japan's Millea Holdings Inc <8766.T> rose.
The yen <JPY=> steadied after weakening to almost 107.5 to
the dollar, helping blue-chip exporters such as Canon Inc
<7751.T>.
"Basically, the market's worries have been just temporarily
lifted," said Takashi Ushio, head of the investment strategy
division at Marusan Securities in Tokyo.
"This doesn't address the root cause of the crisis. The
only thing that will really solve the situation is measures
like a fund injection."
GOLD TARNISHED
Buffet's move also sapped enthusiasm for safe-haven assets
such as gold <XAU=>, which slipped back towards $900 an ounce.
The metal was also tarnished by a top industry official in
India saying high prices were killing off demand.
[]
However, returning Chinese traders powered Shanghai copper
futures <SCFJ8> to the daily 4 percent limit at the market open
as the metal raced to match gains in the London price <MCU3>.
Asian tech investors saw the brighter side of the U.S.
picture, despite a glum Nasdaq <>, which was dragged to a
flat close by Apple Inc <AAPL.O> and Research In Motion
<RIMM.O>.
But Asian stocks' gains were limited by uncertainty ahead
of key Japanese and U.S. economic indicators including Japan's
gross domestic product data due on Thursday.
Thursday's centrepiece will be U.S. Federal Reserve
Chairman Ben Bernanke's testimony to Congress about the state
of the U.S. economy, following a quarterly survey from the
Philadelphia Federal Reserve on Tuesday, which said the economy
would struggle to grow in the first quarter of this year.
[]
(Additional reporting by Kim Soyoung in SEOUL, Elaine Lies
in TOKYO; Editing by Lincoln Feast )
