Hong Kong: Oil steadied at above $89 a barrel on Monday following last week’s near $10 slide, but Asian stocks took a breather after posting their best weekly gain in more than three months.
European stocks were seen edging lower after a strong three-session rally, with financial bookmakers predicting Britain’s FTSE 100 opening little changed, the German DAX index down 13-16 points and the French CAC 40 8-14 points lower.
The pause in stocks helped the low-yielding yen firm slightly, recouping some of Friday’s decline against the dollar and euro, and pushed safe-haven Japanese government bonds higher.
Expectations of an interest rate cut by the Federal Reserve at its 11 December policy meeting had helped counter ongoing worries about the fallout from a tight credit market and a deep US housing slump, sparking a rally in stocks last week.
“Investors are standing on the sidelines after the market rebounded last week and on emerging concerns about a stronger yen,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
Tokyo’s Nikkei average ended 0.3% lower, while MSCI’s measure of other Asia Pacific stocks edged up nearly 0.3% by 0620 GMT.
Last week, the MSCI index rallied 5.1%, snapping four straight weeks of losses, but November was the index’s worst month since May 2006.
US crude for January delivery rose nearly $1 to above $89.50 a barrel, but was still well off a record high near $100 set on 21 November, as investors bet that last week’s selloff was overdone.
Gold which had tracked oil lower, also edged up towards $790 an ounce after last week’s 4.8% drop.
Bank stocks mostly rose across the region, further buoyed by optimism over a proposed rescue for struggling US homeowners.
Both the US Treasury and US mortgage industry leaders are close to finalising a plan that would freeze interest rates for subprime borrowers before they reset sharply higher.
Citigroup’s Tokyo shares advanced 5.4%, Japan’s top lender Mitsubishi UFJ added 2.7% and National Australia Bank put on more than 1%, but South Korea’s Kookmin Bank lagged, easing 2.1%.
Some technology stocks were pressured by a slide in Dell Inc, which disappointed investors with its outlook. Memory chip maker Hynix Semiconductor and Toshiba Corp both fell more than 2%.
But China Railway Group, whose Shanghai share sale attracted a record $457 billion in subscriptions, rose more than 60% on their debut, in line with expectations.
The low-yielding yen benefited as caution emerged following a British newspaper report that Royal Bank of Scotland is expected to announce up to 2 billion pounds ($4.1 billion) of credit-related losses this week.
The dollar, which last week recorded its biggest weekly jump against the yen in nearly two years, slipped to 110.58 yen from last week’s peak near 111.25 yen.
The euro also pared last week’s gains against the yen, slipping to 162.18 yen from last Friday’s high of about 163.85 yen. Against the dollar, the single currency edged up to $1.4667 steadying from last week’s fall to two-week lows.
The dollar rose strongly last week as Wall Street rallied on the back of growing expectations for US interest rate cuts.
“There seems to be some nervousness this morning. But on the other hand, there are some positive pieces of news from last week that could prevent a significant unwinding of carry in the near term,” said Sharada Selvanathan, a currency strategist at BNP Paribas in Hong Kong.
Among government bonds, the yield on the benchmark 10-year Japanese government bonds eased 2.5 ticks to 1.445 percent after cautious comments from Bank of Japan Governor Toshihiko Fukui.
Fukui warned that US growth could slow further and potentially affect the global economy, underscoring market expectations that the next interest rate rise will not come until well into next year.