ASIA MARKETS: Most Asian Stocks End Higher; Hong Kong Drops

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Most Asian markets rose Wednesday after the Dow Jones industrials ended at a record high, although trading was choppy as concern that the Federal Reserve may taper its bond purchases tempered optimism.

"In the U.S., fundamentals continue to click into gear in the world's largest economy," said Niall King, an analyst at CMC Markets. "Equity valuations continue to out-pace economic growth, however, and with cash mounting on corporate balance sheets, the Fed must ponder whether their attempted stimulus is reaching its intended destination."

South Korea's Kospi rose 0.8% and Taiwan's Taiex gained 0.9%.

Japan's Nikkei Stock Average , China's Shanghai Composite and Australia's S&P/ASX 200 each ended 0.1% higher after flirting with losses, with Tokyo-listed equities charting a more volatile path.

Hong Kong's Hang Seng Index skidded 1.6% after a two-day rally, with losses accelerating in the afternoon as U.S. equity index futures pointed firmly lower.

The broad gains came after the Dow Jones Industrial Average (DJI) climbed to its highest closing level Tuesday in the wake of data showing an improvement in U.S. consumer confidence and real-estate market. DJIA futures were down 42 points, or 0.3%, by late afternoon in Hong Kong.

Stock movers

Shares of several Japanese exporters turned lower as the yen (USDJPY) strengthened after Bank of Japan Gov. Haruhiko Kuroda said the global economy has yet to completely shake off the adverse effects of the global financial crisis.

Sony Corp. (SHCAY) fell 0.6%, Sharp Corp. (SNE) dropped 3.4% and Mazda Motor Corp. (MZDAY) eased 1.2%.

Financial stocks were choppy amid volatility in the yields on Japanese government bonds, with Mizuho Financial Group Inc. (MFG) reversing early gains to drop 0.5%, while Sumitomo Mitsui Trust Holdings Inc. (SUTNY) shed 2.4%. Banks are the largest class of investors holding JGBs.

The yield on 10-year Japanese government bonds, which ended a little over 0.9% on Tuesday, rose further on Wednesday. The yield, which had risen as high as 0.94% earlier in the day, was at 0.92% by early afternoon, according to FactSet data.

Shares of Softbank Corp. (9984.TO) climbed 2.1% on reports the mobile service provider and Sprint Nextel Corp. (US-S) have reached an agreement with the U.S. to protect national security, clearing a hurdle in Softbank's plan to acquire the U.S. wireless operator.

In Sydney, stocks that pay high dividends led the market's retreat as the Australian dollar (AUDUSD) traded under 96 U.S. cents.

Shares of Commonwealth Bank of Australia dropped 2.5%, while Australia & New Zealand Banking Group (ANZBY) fell 1.7%, despite announcing a A$425 million share buyback.

A rally in mining stocks in the wake of the strong finish on Wall Street helped the broader market overcome those losses, with BHP Billiton Ltd. (BHP) rising 2.6% and Rio Tinto Ltd. (RIO) climbing 3.4%.

Losses in Hong Kong came as investors locked in recent gains in banks and property developers.

Shares of Industrial & Commercial Bank of China Ltd. (IDCBY) dropped 1.5%, China Overseas Land & Investment Ltd. (CAOVY) shed 3.2% and ports operator Cosco Pacific Ltd. (CSPKY) fell 1.4%.

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