Tokyo: Japan’s stocks closed at their lowest in almost three months on Monday, while the dollar gained against the euro and sterling as investors shunned risk and oil prices fell on forecasts of a deepening global downturn.
Many Asian markets were closed for the lunar New Year, with Australia and India also shut for national holidays, making activity thin.
European shares followed Tokyo’s lead downward in early trade but then edged higher, led by a surge in ING Groep NV, which said it would tap into government guarantees, and Barclays Plc., which flagged a strong start to the year.
At 9.45 GMT, the FTSEurofirst 300 Index of top European shares was up 0.3%.
ING jumped 13.5% after saying it would tap into €22 billion of Dutch state loan guarantees for its troubled loan portfolio, and that its chief executive was stepping down.
Barclays leapt as much as 27% after it said 2008 profit had been struck after all costs, impairment and market valuations. It said it had seen a good start to 2009 and that customer activity levels had been high.
US 10-year treasurys firmed slightly in Asian trade, while 30-year bonds pared losses after falling late last week on worries about hefty borrowing to fund Washington’s stimulus plans.
US President Barack Obama’s top economic adviser Lawrence Summers did not rule out that more money may be needed to stabilize the US financial system, as Obama sought at the weekend to build public support for an $825 billion (Rs40.59 trillion) economic recovery plan. The Federal Open Markets Committee (FOMC) meets on Tuesday and Wednesday, with the market awaiting signs of how the Fed will help the broader US economy, now that its main monetary tool—the Fed funds rate—is set to remain in a range of zero to 0.25%.
“What investors are concerned about most is the health of the UK and European banking sectors and that is hitting European currencies and lifting the dollar, while hopes for the Obama administration helping the US economy persist,” said Yasutoshi Nagai, senior economist at Daiwa Securities SMBC Co. Ltd. Japan’s Nikkei average fell to close 0.8% down, weighed by dismal earnings outlooks, including a profit warning by construction machinery maker Komatsu Ltd.
But losses were kept in check as investors snapped up battered shipping firms on the view they had been oversold and the view Chinese imports might be picking up.
The dollar moved back near a 23-year high against sterling and a six-week high against the euro in Asian trade as fears about the global recession and banking sector problems persisted.
An International Monetary Fund official said at the weekend the fund would cut its 2009 global growth forecast to between 1% and 1.5%.
Elaine Lies and Rika Otsuka contributed to this story.