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Written by: Staff

SINGAPORE, Mar 28 (Reuters) Japanese stocks fell as dividend plays slipped ahead of the fiscal year-end, while other Asian markets were mixed on Tuesday ahead of the first policy decision of the Federal Reserve under chairman Ben Bernanke.

The dollar was defensive as investors waited to hear the Fed's thoughts on interest rates, while oil held above $64 a barrel as threats of attacks on oil facilities in Nigeria put a floor under prices.

The Fed is expected to lift U.S. interest rates to 4.75 percent from 4.5 percent later on Tuesday, in what would be the 15th increase in as many meetings dating back to June 2004.

More important for markets are what signals the central bank might send on future rate moves, amid speculation that U.S. interest rates may be nearing a peak.

''The market could react if the statement indicates in any way that the tightening cycle is winding down,'' said Shigeru Komatsu, forex dealer at Sumitomo Trust and Banking. ''But the possibility that the Fed will say anything that will shake up the market is very low.'' Tokyo's benchmark Nikkei average ended morning trade down 0.57 percent at 16,554.56, while MSCI's index of non-Japan Asian shares was up 0.15 percent at 0200 GMT.

Traders buying most Nikkei component stocks on Tuesday won't be able to claim dividend rights for this fiscal year, which ends on Friday. With the dividend incentive gone, some traders moved to lock in profits.

That hit stocks such as shipping firm Nippon Yusen K.K. and brokerage Nikko Cordial Corp., whose high dividend yields had attracted buyers.

''Once (players) grab dividend rights they seem no longer interested given the lacklustre trade in bank shares recently, which looks to suggest a directionless market for now,'' said Tatsuyuki Kawasaki, a director in Kaneyama Securities' equities trading division.

Outside of Japan, market moves were more muted and, in line with U.S. closes -- the Dow Jones industrial average fell 0.26 percent, while the Nasdaq Composite Index edged up 0.12 percent -- there was no uniform direction.

South Korean shares were down 0.3 percent by 0200 GMT, while Taiwan shares were up 0.3 percent. Hong Kong's Hang Seng Index opened up 0.05 percent.

Australian shares were up 0.1 percent at 0200 GMT, having set record closing highs for each of the last four sessions.

The index has risen 6.8 percent this year, with a third of that increase coming in the past six trading days.

''It is breathtaking sometimes when the market goes like this,'' said Hans Kunnen, head of investment markets research, at Australia's biggest funds manager, Colonial First State.

''But the bulk of the market is on a solid foundation of good economic growth and good earnings growth.'' DOLLAR CAUTION Investors seemed reluctant to enter big dollar trades until they had heard from the Fed, while the yen was supported against the dollar and euro by Japanese repatriation ahead of the end of the fiscal year.

At 0200 GMT the dollar was buying 116.80 yen little changed from late New York, after earlier having fallen to one-week lows around 116.30.

The was sitting at $1.20, also little changed from New York.

China raised the prospect on Tuesday of allowing market forces to play a greater role in setting the value of the yuan, saying most companies had adapted well to the country's floating exchange rate regime.

Silver remained near Monday's 22-year high of $10.92 an ounce, and that helped support gold around $566 an ounce, although tough resistance was expected before $570.

NYMEX crude was holding above $64 a barrel, with the release of three oil workers by Nigerian militants doing little to ease market worries about further attacks on the country's oil industry.


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