Asian stocks mixed on US rate talk, China fears

Asian markets were mixed Wednesday as traders assessed the prospects of an early US interest rate rise and China's moves to stem a recent market rout.

The dollar advanced to a four-month high after a US Federal Reserve official expressed support Tuesday for an interest rate rise as early as September.

Tokyo put on 0.46 percent, or 93.70 points, to close at 20,614.06, while Seoul ended flat, gaining 1.77 points to 2,029.76.

Sydney lost 0.42 percent, or 23.9 points, to close at 5,674.0, despite big gains by miners on the back of an iron ore price rise.

Hong Kong was up 0.47 percent in afternoon trading, while Shanghai was down 0.36 percent as investors took profits after strong gains the previous day sparked by new restrictions on short-selling.

The Shanghai and Shenzhen exchanges said Monday investors who borrow shares must wait until the next day to repay the loans, instead of settling the same day as previously.

That measure followed earlier interventions including banning major shareholders from selling and funding a state-backed firm to buy stocks.

"The government's unprecedented, rushed market intervention may have supported prices initially but at the expense of its long-term credibility," Alex Wolf, an economist for emerging markets at Standard Life Investments, told Bloomberg News.

Traders were also taking note of a International Monetary Fund declaration Tuesday that "significant work" needs to be done in reviewing the inclusion of China's currency in its basket of "special drawing rights" reserve currency.

The Chinese government is seeking to expand use of the yuan by having it included in the SDR, an international reserve asset that currently is comprised by four currencies: the dollar, euro, pound and yen.

- Wary market -

Tokyo ticked up after a brief slide in opening trade, rising on positive earnings reports and a weaker yen, but analysts advised caution.

Among Japanese firms that have already reported in the latest earnings season, 61 percent exceeded profit expectations, an improvement from the 48 percent that beat forecasts in the previous quarter, according to data compiled by Bloomberg.

"The overseas environment will continue to be a drag on the market," Hiroichi Nishi, a manager at SMBC Nikko Securities Inc. in Tokyo, told Bloomberg News.

"Lockhart's comments made the market wary of rate hikes once again. Caution toward the Chinese economy continues to weigh on the market as well."

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said Tuesday he supports raising rates in September barring an unexpected stumble in the economy.

Currency traders are keeping a close eye on US economic data as they try to gauge the timeline for a rate increase -- a plus for the dollar -- which is widely expected in September or December.

In Tokyo forex trade, the dollar was at 124.40 yen at the close, up from 123.93 yen early Tuesday.

The greenback traded at 124.36 yen in New York late Tuesday.

The euro was at $1.0870 and 135.22 yen compared with $1.0882 and 124.40 yen in US trade.

The dollar's strength appeared to hit already declining demand for gold, which is less sought after in times of higher interest rates.

It fetched $1,087.79 an ounce compared with $1,092.65 on Tuesday.

US stocks ended lower Tuesday following a mixed batch of earnings reports and a fall by Apple of 3.2 percent, leaving it down more than 12 percent since its July 21 earnings release.

The Dow Jones Industrial Average dropped 0.27 percent. The broad-based S&P 500 fell 0.22 percent, while the tech-rich Nasdaq Composite Index slid 0.19 percent.

Oil prices rose on expectations of upbeat US stockpiles and jobs data due at the end of the week. US benchmark West Texas Intermediate for September delivery gained 51 cents to $46.26 while Brent crude for September was up 59 cents to $50.59

In other markets:

-- Wellington was flat, inching ahead 0.08 percent or 4.76 points to 5,938.51.

Contact Energy was up 0.80 percent at NZ$5.06 while Genesis Energy was down 1.14 percent at NZ$1.73.

-- Taipei rose 0.37 percent, or 31.41 points, to 8,542.27.

Taiwan Semiconductor Manufacturing Co shed 1.83 percent to Tw$134.0, while Fubon Financial Holding closed 1.22 percent higher at Tw$58.0.