ASIA MARKETS: Japan Stocks Pare Losses Late As Asia Falls

By Michael Kitchen, MarketWatch

LOS ANGELES (MarketWatch) -- After spending most of the day deep in negative territory, Japanese stocks swung upward in the afternoon to end with only mild losses, while other Asia markets also retreated.

Japan's Nikkei Stock Average ended 0.2% down at 13,289.32 after trading some 2% lower earlier in the day, with the benchmark recovering as the dollar rebounded against the yen.

Likewise, Australia's S&P/ASX 200 finished down 0.7%, and South Korea's Kospi 0.6% lower.

Markets in China -- including those in Hong Kong and Shanghai -- were closed for the Dragon Boat Festival.

Japan had led the losses for Asia after the dollar (USDJPY) fell by almost 2 full yen overnight to Yen96.22, having bought more than Yen98 at Tuesday's Japan stock close.

But the dollar staged a modest rebound during the East Asian afternoon, hitting Yen96.77 by the time Tokyo closed for trading.

The dollar's drop followed the Bank of Japan's policy decision Tuesday, which contained no new easing moves.

"There appeared to be some heightened anxiety levels across Asian markets today, as traders contemplate a world without additional economic stimulus," CMC Markets senior trader Tim Waterer wrote Wednesday.

"There may have been some unrealistic hopes that the BOJ would have come up with some fresh stimulus ideas, and when this didn't eventuate, it set the ball rolling in terms of selling momentum," he wrote.

The dollar traded above Yen100 early last week but has remained below that level since Japanese Prime Minister Shinzo Abe announced a slate of economic reforms -- referred to as the "third arrow" of his three-pronged push to revive the nation's fortunes, along with fiscal stimulus and monetary easing.

Chapdelaine FX managing director Douglas Borthwick compared Abe's campaign unfavorably with European Central Bank President Mario Draghi's actions to combat the euro-zone debt crisis.

"The ECB carries a bazooka into the currency wars, as Draghi pledges to do 'whatever it takes,' [while] Japan's Prime Minister Abe is fighting with a bow and arrow," he wrote Tuesday. "The market is taking the view that Japan may not have either the stomach or the capacity to follow through with Prime Minister Abe."

But the yen's move back lower late Wednesday helped send some Japanese exporter shares swinging back to gains, with Nikon Corp. (NINOF) up 1.7%, and Mitsubishi Heavy Industries Ltd. (7011.TO) rallying 3.5%.

Still, many major names were unable to fully recover, with Sony Corp. (SNE) finishing down 1.1%, Renesas Electronics Corp. (RNECY) losing 2.4%, Toyota Motor Corp. (TM) off 1.8%, and Nissan Motor Co. (NSANY) surrendering 2.3%.

Hitachi Ltd. (HIT) ended on an upnote, however, rising 1.1% after a Nikkei news report that the conglomerate had secured an order to supply trains for a light-rail project in Vietnam's Ho Chi Minh City.

Panasonic Corp. (PC) added 1.6% after a separate Nikkei report that China's Huawei Technologies Co. would double by value its procurement of parts from Japan over the next several years, with Panasonic as one of the beneficiaries.

But Tuesday's losses on Wall Street -- with a triple-digit loss for the Dow industrials (DJI) and a 1% fall for the S&P 500 (SPX) -- weighed on financials around Asia.

In Tokyo, Mitsubishi UFJ Financial Group Inc. (MTU) lost 1.8%, Dai-ichi Life Insurance Co. (DCNSF) closed 2.5% lower, and Resona Holdings Inc. (8308.TO) pulled back 3.2%.

Similarly, many Australian banks saw selling, with National Australia Bank Ltd. (NAUBF), Westpac Banking Corp. (WBK) and Australia & New Zealand Banking Group (ANEWF) dropping 1.2% apiece.

Mining stocks also took a toll on the Sydney market after a decline in many commodity prices, with Fortescue Metals Group Ltd. (FSUMY) down 3.2%, BHP Billiton Ltd. (BHP) slipping 0.4%, and Newcrest Mining Ltd. (NCMGF) finishing down 0.8% after the gold producer told Australia's securities exchange that it didn't break any share-listing rules related to the timing of the company's recent restructuring announcement.

Early weakness in Australia briefly sent the S&P/ASX 200 into a technical correction, defined as a 10% drop from the most recent high.

In South Korea, Samsung Electronics Co. (SSNLF) slipped 0.3%, after its shares dropped 2.5% Tuesday amid concerns over sales for its new Galaxy S4 smartphone.

Credit Suisse said it held the shares' rating at outperform, and that the recent losses for Samsung offered a buying opportunity, according to Dow Jones Newswires.

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