ASIA MARKETS: Japan Stocks Rebound As Asia Awaits Fed Meeting

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Japanese stocks on Monday bounced strongly higher after a weak start, as several exporters climbed on the yen's retreat, while other Asian markets diverged amid caution ahead of the Federal Reserve's policy decision later this week.

Trading was choppy across the region as investors looked ahead to the outcome of the Fed's two-day meeting on Wednesday, awaiting more clues on the U.S. central bank's policy intentions, especially on the pace of its monthly bond purchases.

"The ability of Fed Chairman Ben Bernanke to communicate effectively the Fed's strategy over 'tapering' will be crucial to determine whether market volatility persists," said Crédit Agricole's Asia head of global markets research Mitul Kotecha.

After opening lower, the Nikkei Stock Average rose 1.2% by the late morning in Tokyo, extending its bounce from Friday, when it snapped a three-day losing streak to pare weekly losses. The broader Topix climbed 1.3%.

South Korea's Kospi rose marginally after also dipping into negative territory earlier in the day, while Hong Kong's Hang Seng Index climbed 0.9%.

On the downside, the Shanghai Composite fell 0.4%, edging lower after it snapped an eight-day losing streak on Friday, while Australia's S&P/ASX 200 slipped 0.2%.

The divergence in regional markets came as equity index futures based on the Standard & Poor's 500 Index (SPX) and the Dow Jones Industrial Average (DJI) traded higher on Monday, after U.S. stocks ended lower on Friday.

Major movers

In Tokyo, shares of several firms with a significant international presence advanced as the dollar (USDJPY) strengthened from the levels seen in late North American hours Friday.

Shares of Japan Tobacco Inc. (JAPAF) jumped 4.9%, and drug maker Eisai Co. (ESALY) gained 3.1%, while tire producer Bridgestone Corp. (BRDCY) climbed 3.6%.

Property developers extended gains in Hong Kong, with China Resources Land Ltd. (CRBJF) rising 3.8%, and Cheung Kong Holdings Ltd. (CHEUY) adding 2.7% after announcing it and its joint-venture partners were buying a Dutch waste-processing firm.

Among energy producers, shares of Cnooc Ltd. (CEO) climbed 3.4%, and those PetroChina Co. (PTR) added 1.9%, after benchmark U.S. crude-oil futures jumped on Friday.

Shares of China Everbright Bank Ltd. climbed 2.1% in Shanghai, and those of New China Life Insurance Co. advanced 2.5% in Hong Kong, following news that Central Huijin Investment Ltd., a key state-owned shareholder in major Chinese banks and financial firms, had increased its stake in the two firms.

On the downside, the Hong Kong-listed shares of ICBC (IDCBY) tumbled 5.1% as they began trading without rights to a dividend.

Australian shares pulled back after Friday's strong rebound, with miners in the lead.

BHP Billiton Ltd. (BHP) dropped 1.4%, and Rio Tinto Ltd. (RIO) shed 1.7%.

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