By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Chinese stocks retreated Thursday,
prompting a pullback in some other Asian markets after data showing
consumer prices rose more than expected.
The Shanghai Composite dropped 0.6% and Hong Kong's Hang Seng
Index slipped 0.1%.
Government data released earlier in the day showed China's
consumer price index rose 2.4% in April from the year-ago period,
driven by food prices. The producer price index, which measures
wholesale prices, dropped a sharper-than-expected 2.6%.
Bank of America Merrill Lynch China economist Ting Lu said that
although consumer prices quickened, a steeper fall in wholesale
prices during the month were likely to limit market reaction.
"Inflation pressure is quite low, and the room remains big for
the new government to maintain relatively accommodative monetary
and fiscal policies. However, we expect no additional stimulus, as
growth could naturally recover a bit, and policy makers can
tolerate a lower growth," Lu said.
Japan's Nikkei Stock Average declined 0.7% and Australia's ended
marginally lower, with both benchmarks unable to hold on to early
gains. Each had ended Wednesday at their highest level since June
2008.
The drop in Sydney came as monthly employment data showing the
Australian economy added substantially more jobs than expected in
April. The strong employment data raised doubts the central bank
would lower interest rates further after trimming the benchmark
cash rate Tuesday.
The Kospi , meanwhile, climbed 1.2% after a surprise
interest-rate cut by the Bank of Korea.
Most Asian markets had advanced in morning trade after U.S. and
German equities climbed further into record territory, but couldn't
hold on to those gains.
The Dow Jones Industrial Average (DJI) and the Standard &
Poor's 500 Index (SPX) both ended at record highs in the U.S. on
Wednesday, while the German benchmark index also finished at an
all-time peak.
Futures on the Dow Jones Industrial Average and the S&P 500
were slightly lower in Asian afternoon trade, also giving up early
advances.
Major movers
Chinese property developers fell after the inflation data.
Gemdale Corp. lost 2.7% in Shanghai, China Vanke Co.'s
yuan-denominated A shares retreated 1.3% in Shenzhen, and China
Overseas Land & Investment Ltd. (CAOVY) shed 1.2% in Hong
Kong.
"The question is whether this is a reflection of a wider slowing
of the economy," said Andrew Sullivan, director of sales trading at
Kim Eng Securities.
In Tokyo, a strengthened yen also hurt several exporters as the
U.S. dollar slid further below the Yen99 level.
Shares of Toyota (TM), which reported that its profit more than
doubled in the quarter ended March 31 on the back of strong sales
in the U.S. and a weakened yen, gave up early gains to finish 1.4%
lower.
Among other firms that also rely heavily on international sales
and are adversely affected by a stronger yen, Canon Inc. (CAJ) fell
1% and Honda Motor Corp. (HMC) dropped 1.3%.
Sony Corp. (SNE) ended 1.4% lower ahead of its quarterly
earnings report.
Tire maker Bridgestone Corp. (BRDCY) tumbled 6.6% and Toshiba
Corp. (TOSYY) dropped 4.9% after their earnings reports Wednesday
fell short of expectations.
Among gainers, Daikin Industries Ltd. (DKILY) soared 6% after
the company posted an increase in annual profit.
Resona Holdings Inc. (8308.TO) added 1.5% after the Nikkei
reported the financial-services firm planned in five years to repay
the public funds it owes the government.
In Seoul, banks climbed after the Bank of Korea's interest-rate
cut by a quarter-point to 2.5%, where most economists had expected
no change.
Shares of KB Financial Group Inc. (KB) rose 3.1%, and Shinhan
Financial Group Co. (SHG) gained 2.5%.
In Sydney, banks were mostly lower after data showing the local
economy added as many as 50,100 jobs in April, trouncing
expectations for an addition of 12,000 jobs. The data came after
36,000 jobs were lost in March.
National Australia Bank Ltd. (NABZY) dropped 2.1% and Australia
& New Zealand Banking Group (ANZBY) lost 2.8%.
"Looking through the noise, it does appear that employment has
improved since the beginning of this year," HSBC's Australia and
New Zealand chief economist Paul Bloxham wrote to clients in a
report.
"The labor-force data are providing some evidence that the soft
patch in growth may be behind us. Recent indicators also suggest
that [first-quarter gross domestic product] is likely to be strong.
The Reserve Bank of Australia may not need to ease any further,"
Bloxham said.
Advancers included News Corp. (NWS), shares of which climbed
2.9%.
The media conglomerate posted fiscal-third-quarter earnings
excluding items of 36 cents a share, beating analyst expectations
by 1 cent a share. Revenue totaled $9.54 billion, ahead of
projections of $9.14 billion. News Corp. is the owner of
MarketWatch, the publisher of this report.
Also in Australia, Billabong International Ltd. (BBG.AU)
requested that trading in its shares be suspended, pending an
announcement related to transactions affecting the surfwear
retailer, which has been in takeover talks.
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