Asian shares mixed ahead of key Europe summit
Asian shares were mixed on Tuesday with investors taking a breather from the previous day's rally as they nervously await a crucial summit aimed at tackling the eurozone debt crisis. Wall Street gave a strong cue as dealers there were buoyed by solid corporate earnings reports and hopes that progress was being made by European leaders on the region's fiscal problems. "It's a consequence of the strong gains and a little bit of caution before Wednesday's EU summit," Macquarie Private Wealth investment adviser James Rosenberg said in Australia. "Sure there's optimism on Europe, but this will be their 14th crisis meeting in 21 months." Tokyo slipped 0.92 percent, or 81.67 points, to 8,762.31 and Sydney closed down 0.64 percent, or 27.1 points, at 4,227.9 while Seoul lost 0.51 percent, or 9.67 points, to end at 1,888.65. However, Hong Kong added 0.49 percent in the afternoon and Shanghai rose 1.75 percent, with both markets lifted by Chinese data showing a pick up in manufacturing activity on the mainland. Attention has been fixed on Europe, where debt crises in Greece, Italy and Spain have raised concerns that at least one of them could default on their repayments, leading to a credit crunch and possibly another global meltdown. However, European leaders, including French President Nicolas Sarkozy and IMF chief Christine Lagarde, on Sunday said "good progress" had been made in a summit on the crisis. They announced few details but promised to reveal all after a second round of high-level talks on Wednesday. The eurozone wants to beef up its 440-billion-euro ($610 billion) rescue fund, the European Financial Stability Facility, to convince markets it has the means to protect highly indebted nations. Leaders also want to agree on a huge write-down on the debt of stricken Greece and make sure banks have enough firepower to withstand these losses. Despite the Europeans' progress, there are concerns they might not be able to do enough because of their many differences. Investors want to see the recent assurances turned into a definitive and binding agreement Wednesday. Chancellor Angela Merkel needs an approval of Germany's parliament before she can back a plan to boost the bailout fund at the summit. "With high expectation being priced in, any under-delivery will disappoint the market and spark a sell-off," Credit Agricole strategist Mitul Kotecha told Dow Jones Newswires. While optimism over Europe provided a strong base, US shares were also pushed higher by strong corporate earnings. Among the standout reports was Caterpillar, the world's leading manufacturer of heavy construction and mining equipment, which posted a 44 percent profit rise on robust revenues. Often considered a bellwether of the global economy, Caterpillar said it had its best-ever quarter for sales and an order backlog at an all-time high. The Dow gained 0.89 percent, the Nasdaq added 2.35 percent and the S&P 500 climbed 1.29 percent. On currency markets the dollar continued to be pressured by the yen after it sank to a record low 75.78 against the Japanese unit on Friday. The greenback was at 76.08 yen in Tokyo, from 76.09 in New York late Monday. The euro bought $1.3920, from $1.3929 in New York, and 105.89 yen from 106.02 yen. New York's main contract, light sweet crude for December delivery, gained 51 cents to $91.78 per barrel in the afternoon. Brent North Sea crude for December fell 16 cents to $111.29. By 0630 GMT, gold was trading at $1,656.60 an ounce, up from $1,653.90 on Monday. In other markets: -- Taipei rose 0.28 percent, or 20.91 points, to 7,491.21. Hon Hai rose 3.82 percent to Tw$78.8 while TSMC was 0.28 percent lower at Tw$71.5. -- Manila gained 0.98 percent, or 41.44 points, to close at 4,242.54. Philippine Long Distance Telephone rose 1.76 percent to 2,306 pesos while Metro Pacific Investment Corp. added 4.92 percent to 3.20 pesos. -- Wellington closed 0.46 percent, or 15.21 points, higher at 3,296.63. Sky Television rose 3.4 percent to NZ$5.56 and Telecom put on 0.4 percent at NZ$2.56.
