Tomahawk, WI 10/5/2011 (PennyPayDay) – Most Asian stocks rose on Wednesday and commodities rebounded for the first time in four days, as investors cheered news that European officials are strengthening efforts to shore up the euro zone's banking sector. However, the positive mode was tempered by Italy's rating downgrade.
Moody's Investors Service downgraded Italy's government bond ratings by three notches to A2 from Aa2, with a negative outlook, citing material increase in long-term funding risks for euro area sovereigns with high levels of public debt.
The negative outlook also reflects an increase in downside risks to economic growth due to macroeconomic structural weaknesses and a weakening global outlook , the ratings agency said.
Investors also digested comments from the Federal Reserve that it stands ready to support the fragile U.S. economy that was "close to faltering".
Tokyo stocks drifted lower for a fourth straight session, as the yen's brief marginal fall versus the dollar and an Italian ratings downgrade dented sentiment. The Nikkei average dropped 0.9 percent, while the broader Topix index lost 1.4 percent. Mizuho Financial Group fell 1.8 percent and Sumitomo Mitsui Financial Group lost 2.3 percent on lingering worries over Europe's debt crisis.
Fast Retailing slumped 4 percent after the apparel chains said same-store sales at its Uniqlo casual clothing stores fell 10.7 percent from a year ago in September. Utility Tokyo Electric Power plunged 12 percent and Kyushu Electric Power lost 5 percent on concerns about electricity shortages in the winter amid the Fukushima nuclear crisis.
Among exporters, Sony fell 1.8 percent and Toyota lost 2 percent, while Canon gained 0.9 percent and Olympus closed up 0.1 percent. TDK tumbled 3.7 percent after Credit Suisse downgraded its rating on the stock, citing worries emanating from the strong yen and weak PC demand.
Australia's benchmark S&P/ASX closed in the green for the first time this week, ending 1.4 percent higher, as resource shares rallied mirroring a rally in commodity markets. The broader All Ordinaries index closed up 1.5 percent.
Big miner BHP Billiton climbed 3.8 percent, rival Rio Tinto gained 2.2 percent and Fortescue jumped 4.7 percent. Reports released today said both Rio and Ivanhoe Mines have rejected requests from the Mongolian government to renegotiate the investment agreement relating to the massive massive Oyu Tolgoi copper and gold mine.
Among gold miners, Newcrest slipped 0.1 percent and Eldorado Gold tumbled 5.7 percent. In the oil & gas sector, Woodside and Santos rallied over 4 percent each, while Oil Search advanced 3.7 percent. The big four banks ended mostly higher, with ANZ, NAB and Westpac rising between 1 percent and 2.4 percent, while Commonwealth closed unchanged. Investment bank Macquarie Group closed up 1.4 percent.
Telstra edged up 0.3 percent after its $11 billion deal with the federal government gained its first fully independent recommendation from an influential proxy adviser.
South Korea's Kospi average fell 2.3 percent, giving up early gains, as Italy's government debt rating downgrade spurred a selling spree among foreigners and pension funds. Construction stocks like Hyundai Engineering & Construction and Daewoo Engineering & Construction tumbled on concerns that lower oil prices may damp demand for plant orders from oil producing countries in the Middle East.
Retailers closed on a mixed note after a private survey showed South Korean retailers' business confidence dropped to a two-year low in the fourth-quarter. LG Electronics rose around half a percent after Apple's launch of a new iPhone on Tuesday drew somewhat muted response.
On the economic front, financial markets are reacting "sensitively" to external fear factors and excessive anxiety will have a side effect on the real economy, Finance Minister Bahk Jae-wan reportedly said in a weekly crisis management meeting.
New Zealand's benchmark NZX-50 closed 0.2 percent higher after a late-session rally helped U.S. stocks close sharply higher overnight. Australian food ingredient maker Goodman Fielder climbed 3.5 percent after the company appointed its New Zealand dairy chief Peter Reidie to head its combined New Zealand operations.
Freightways, the courier and logistics firm, which has agreed to buy Iron Mountain New Zealand for $12.7 million earlier this week, jumped 3.1 percent, while retailers such as Hallenstein Glasson Holdings, Michael Hill International and Restaurant Brands rose 2-3 percent. Fisher & Paykel Appliances paced the declines on the exchange, falling 4.4 percent. OceanaGold lost 2.8 percent and Auckland International Airport shed 1.5 percent on going ex-dividend.
Elsewhere, markets in mainland China and Hong Kong were closed on account of national holidays. India's Sensex was last trading little changed with a positive bias, Singapore's Straits Times rose marginally, Indonesia's Jakarta Composite was rising 0.7 percent and Malaysia's KLSE added a percent, while the Taiwan Weighted ended 0.8 percent lower.
On Wall Street, stocks showed considerable volatility before closing sharply higher overnight after the Financial Times said European finance ministers are examining ways to recapitalize financial institutions. The Dow rose 1.4 percent, the Nasdaq jumped 3 percent and the S&P 500 rallied 2.3 percent.