By Tom Miles
HONG KONG, Jan 15 (Reuters) - Asian investors took refuge
in gold and the Japanese yen on Tuesday ahead of a slew of
quarterly U.S. bank earnings which could turn the outlook for
the world's biggest economy from bad to worse.
Fears for the global economy, abetted by a gloomy outlook
from the Bank of Japan, soured the mood after a run of
unexpectedly positive news from the tech sector gave Asian
markets some cheer early in the day.
Japan's Nikkei fell 1 percent, finishing below 14,000 for
the first time since November 2005, with exporters such as
Honda Motor Co Ltd <7267.T> and Daikin Industries Ltd <6367.T>
sold after the yen gained against the dollar.
MSCI's measure of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> was down 0.33 percent by 0620 GMT.
Mounting concerns about Japan's own economic outlook came
to the fore after Bank of Japan Governor Toshihiko Fukui said
Japan's economic growth was expected to slow for some time,
even though the economy would continue to expand.
[]
Gold, a traditional safe haven in choppy markets, traded at
around $908 an ounce after powering to a record $914 on Monday.
A gathering storm of U.S. bank news will break later on
Tuesday when Citigroup Inc <C.N> unveils its fourth-quarter
accounts. Merril Lynch <MER.N> and JP Morgan <JPM.N> will
follow later in the week.
ALL EYES ON CITI
Citi's new Chief Executive Vikram Pandit is likely to
announce a significant dividend cut, at least $10 billion of
new capital and a writedown of as much of $20 billion, as well
as more than 20,000 job cuts, the Wall Street Journal reported
on Monday. CNBC television put the write-down at up to $24
billion and the cuts at to 24,000 jobs.
"You have a new person at the helm. He's going to do what
he can to clear the decks," said Ralph Cole, portfolio manager
at Ferguson Wellman Capital Management in Portland, Oregon.
The Journal also said state-owned China Development Bank
decided not to buy a $2 billion stake in Citi after government
opposition surfaced over the weekend.
"The news of China possibly withdrawing its potential
rescue for Citigroup is raising the alarm over global credit
markets. Uncertainty is peaking ahead of the financial
institutions' results," said Kim Sung-bong, an analyst at
Samsung Securities.
Concerns that the banks' weak earnings could prompt more
Federal Reserve interest rate cuts kept the dollar near
seven-week lows against the yen and the euro. The Australian
dollar also hit another two-month peak against the U.S. dollar.
The weak U.S dollar also contributed to a $1.51 rise in the
U.S. crude oil <CLc1> price on Monday, which slipped to $94.07
a barrel in Asian trade by 0605 GMT on Tuesday.
"We're up on geopolitical concerns, the weaker dollar and
the oversold condition left over from Friday," said Mike
Fitzpatrick, vice president at MF Global.
Crude, which remains below the peak $100.09 struck on Jan.
3, also got a boost from harsh comments by U.S. President
George W. Bush about OPEC member Iran. []
TECH GLEE, SUBPRIME WOES
The gloomy economic outlook pushed Hong Kong's Hang Seng
Index <> down as much as 2 percent, with bellwether bank
HSBC Holdings plc <0005.HK> sinking to a 27-month low.
The Korea Composite Stock Price Index <> also fell
more than 1 percent, although Samsung Electronics <005930.KS>
and LG.Philips LCD <034220.KS> each pulled a rabbit out of the
hat with their quarterly profits.
Samsung showed a smaller-than-expected fall in quarterly
profit as sales of flat screens eclipsed falling chip prices
[] and LG.Philips reported its highest quarterly
profit ever [].
Both firms' shares rose around 2 percent, giving tech
investors two more reasons to celebrate within 24 hours,
following a similar surprise from U.S. computer giant IBM
<IBM.N>. []
IBM's 24 percent rise in preliminary quarterly earnings
assuaged Wall Street's fears about how much a U.S. economic
slowdown would cut into corporate profits, helping the S&P 500
rebound after its fourth-worst start of the year on record.
The tech buzz spread to Taiwan, where the tech-heavy TAIEX
share index <> rose 3.1 percent, its biggest one day jump
in about five months, to extend a rally from the previous
session on hopes for improved China ties after weekend
legislative elections.
Elsewhere, the sub-prime casualties continued to mount.
Sompo Japan Insurance Inc <8755.T>, the country's
second-largest non-life insurer, fell 4.9 percent after cutting
its profit forecast, citing losses on subprime-related assets.
And Australia's Centro Properties Group <CNP.AX>, which
owns 700 shopping malls in the United States, warned about its
liabilities. Its shares plunged 30 percent, condemning the
benchmark S&P/ASX 200 index <> to its seventh straight
loss.
