(Adds European outlook, updates prices)
By Tom Miles
HONG KONG, Feb 13 (Reuters) - Asian equity markets wavered
on Wednesday after an early surge, fuelled by billionaire
investor Warren Buffett's offer to take on $800 billion of U.S.
municipal bond risk, petered out and U.S. economic worries
resurfaced.
Buffett's plan eased fears for the health of the insurance
sector and lifted Asian equities in early trade, although they
later slipped back. []
European stocks are set to open about 1 percent lower, with
earnings from bid target Rio Tinto <RIO.L>, steel major Arcelor
Mittal <MTP.PA> and oil group Total <TOTF.PA> to chew over.
Japan's Nikkei average <> pared early gains to close
0.4 percent higher as investors avoided making major bets ahead
of important Japanese and U.S. economic data. Major banks such
as Mitsubishi UFJ Financial Group <8306.T> fell, offsetting
gains in exporters such as Canon Inc <7751.T>.
MSCI's index of Asian stocks outside Japan <.MIAPJ0000PUS>
was down 0.2 percent by 0655 GMT, while Shanghai stocks
<>, which were catching up with global declines after the
week-long Lunar New Year holiday, fell 2.4 percent.
Seoul's benchmark Korea Composite Stock Price Index <>
also turned south to finish down 0.7 percent after Woori
Finance Holdings' <053000.KS> weak profits and subprime-linked
write-offs stirred worries about slowing earnings momentum in
the financial sector. []
"Investors seem to have started bracing for disappointing
figures when the United States releases January retail sales
data, while continued foreign selling is also a worry," said So
Jang-ho, an analyst at Samsung Securities.
BANKS BATTERED
Banks also battered Australia's S&P/ASX 200 index <>
which closed 1.2 percent down, lumbered with the worst one-day
percentage drop in nearly eight years for Commonwealth Bank
<CBA.AX> after it reported a disappointing first-half profit.
Investors were unnerved by a jump in Commonwealth's bad
debt provisions from low levels, and saw it as a bad omen for
other banks, which face rising costs of funding as the Reserve
Bank of Australia ratchets up interest rates to tame inflation.
"We're seeing markets responding to what the Reserve Bank
is saying and the need to slow activity. That has implications
for the credit cycle," said Karara Capital investment manager
Rohan Walsh.
Bucking the banking trend, however, was Taiwan, where Fubon
Financial <2888.TW> led banking shares <.TFNI> higher on
investor hopes the banking sector will soon get the green light
soon to invest in the red-hot China market. The main TAIEX
share index <> closed flat.
FED UP NEXT
U.S. Treasuries [] barely moved in Asia, keeping the
yield on two-year bonds near a four-year low. With markets
sensitive to any sign of a slowdown in the U.S. economy,
traders set their sights on U.S. retail sales data due at 1330
GMT.
"The market is expecting a weak reading, it's just a matter
of how much weakness is already factored in," said a dealer at
a Japanese trust bank.
"If a disappointing number does not trigger selling in
stocks, we would see some downward pressure on Treasuries."
Also due is a reading on the U.S. trade deficit, which is
projected to narrow moderately to $61.5 billion in December,
from $63.12 billion in November.
The data will set the scene for testimony on Thursday from
U.S. Federal Reserve Chairman Ben Bernanke, 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. []
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."
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.
[]
Treasury dealers said Buffett's plan, which would cover
bonds at the quality end of the market, may do little to
mitigate the risks of further fallout from the subprime
crisis.
(Additional reporting by Kim Soyoung in SEOUL, Sonali Paul in
SYDNEY, Naomi Tajitsu and Elaine Lies in TOKYO; Editing by
Lincoln Feast)
