MW: Hang Seng pares gains, as Sensex, S&P/ASX soar
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Most Asian markets ended higher Monday, as investors encouraged by a higher finish on Wall Street snapped up beaten-down shares, though some narrowed gains toward the close of the session on caution ahead of a slew of economic data and the U.S. presidential election.
Australia's S&P/ASX 200 surged more than 5% on expectations of a 0.5 percentage point interest rate cut by the central bank on Tuesday, and the Sensex rallied after the Reserve Bank of India surprised over the weekend with a range of a monetary easing moves, including a half-point rate reduction.
Hong Kong stocks rebounded on the back of mainland lenders such as Industrial & Commercial Bank of China after the Chinese central bank lifted restrictions on lending.
The Hang Seng Index, which dropped 2.5% Friday, rose as much as 6.6% during the session but gave up more than half those gains to end at 14,344.37, up 2.7%.
Philip Chan, head of research at CAF Securities, said investors were erring on the side of caution before the outcome of the U.S. presidential elections.
"It's not surprising to see some profit-taking pressure. In particular, markets are worried about the possibility of a weak U.S. government if Barack Obama wins only with a marginal lead over John McCain," Chan said.
Other analysts said investors were also likely to pay close attention to U.S. economic data, including the payroll numbers and the unemployment data, as well as rate decisions by the Bank of England and the European Central Bank, due out later in the week.
Japanese stock markets were closed for a holiday.
South Korea's Kospi, which jumped 18.6% in the previous week, jumped as high as 1,158.87 during the session, but gave away some gains toward the close to end at 1,129.08, up 1.4%.
The S&P/ASX 200 index finished 5.1% up at 4,221.50, ahead of the Reserve Bank of Australia's meeting on interest rates Tuesday. The central bank was widely expected to cut its benchmark interest rate by a half-point to 5.5%.
India's Sensex reclaimed the 10,000-point level during the session after the central bank cut interest rates by a half-point to 7.5% on Saturday, marking the second rate cut in two weeks. The central bank also cut by one percentage point the cash reserve ratio -- the amount of deposits banks must set aside as cash -- to 5.5%, in addition to a one point reduction in the statutory liquidity ratio -- the proportion of deposits they much hold in gold, cash and approved securities -- to 24%.
"We expect monetary easing ahead, given Delhi's preference for growth even if it means taking a calculated risk with the ongoing inflation peak off," wrote Merrill Lynch analysts led by Indranil Sen Gupta in a note.
Elsewhere, New Zealand's NZX 50 index ended 1.3% up at 2,856.66, while the Shanghai Composite index closed down 0.5% at 1,719.77 after a volatile session.
Elsewhere, Taiwan's Taiex gained 2.6% to 4,995.06 and Singapore's Straits Times Index jumped 5% to 1,883.75 by late afternoon.
Regional detail
In Hong Kong, shares of China Construction Bank Corp. climbed 2.7% and Industrial & Commercial Bank of China rose 5.1%. The advance came after the Xinhua news agency reported over the weekend that the central bank was no longer capping the amount of loans commercial banks can make.
CAF Securities' Chan, however, said investors preferred to "stay with the largest banks" after they outperformed their smaller peers during the third quarter.
In Mumbai, shares of real estate major DLF soared 14%, while ICICI Bank stock jumped 7.4% on the central bank's easing moves.
Among South Korean shipbuilders, shares of Daewoo Shipbuilding & Marine Engineering Co. spiked 14.7% and STX Shipbuilding Co. climbed 13.8% on continued bargain buying. The stocks are still down at least 67% in 2008 to date.
In Sydney, shares of Westpac Banking Corp. rose 5.9% and National Australia Bank gained 4.6%, while Macquarie Group jumped 12.4% on hopes of an RBA interest rate reduction.
Among resource stocks, BHP Billiton advanced 6.8% and Rio Tinto rose 5.7%.
The gains came in a buoyant market, and in spite of a Sunday Times report that European regulators are expected to threaten to stop BHP's proposed takeover of Rio this wee, because of the pair's dominance over global iron ore supplies.
In Asian currency trading, the U.S. dollar bought 99.29 yen, compared with 98.35 yen late Friday. The Australian dollar changed hands for $0.6793, from $0.660 Friday.
December crude-oil futures slipped $1.15 to $66.66 a barrel in electronic trading, after rising $1.85 to $67.81 a barrel Friday on the New York Mercantile Exchange Friday.
On Wall Street, the Dow Jones Industrial Average rose 1.6% to 9,325.01 and the S&P 500 index gained 1.5% to 968.75, while the Nasdaq Composite climbed 1.3% to 1,720.95.
