Asian Markets Ends June On A Cautious Note

Markets Remain At Par As Crude Oil Settles Above $ 140

Most Asian indices were stuck near break-even point, as investors remained cautious after a string of weak finishes recently and ahead of key economic data from the U.S. later in the week. Energy-related stocks ranked among gainers on high-crude-oil prices, but airline and refining shares extended losses. Concerns about slowing growth in corporate earnings also contributed to weak sentiment.

Japanese stocks continued their downbeat performance, with the benchmark Nikkei 225 Average ending lower for the eighth straight session a day ahead of the Bank of Japan's tankan business sentiment survey. The Nikkei closed down 0.5% to 13,481.38, while the broader Topix index ended little changed at 1,320.10. Looking at the oil prices, Japan's refiners and trading houses surged their May crude oil imports by 16.3% from a year earlier to 20.30 million kiloliters, 4.12 million barrels a day. On the good side, Japan's overall oil product output rose 6.0% on year to 16.99 million kiloliters in May.

On the housing front, Japan's housing starts fell 6.5% in May from a year earlier to 90,804 units. That was the 11th straight month of declines. Housing starts fell 8.7% in April and dropped 15.6% in March. Starts for individual homes in May fell 5.7% to 27,194 units, while those for rental housing slipped 8.6% to 37,733 units. Starts for multiunit dwellings, meanwhile, fell 3.1% to 25,157 units, including condominiums. Adding more concern total construction orders received by Japan's 50 leading domestic contractors fell 25.2% on year to 782.9 billion yen in May following a 8.4% drop in April and a 6.4% gain in March.

Orders from the public sector fell 12.7% to Y83.9 billion. Private-sector orders decreased 23.2% to Y606.4 billion. Overseas construction orders declined 58.9% to Y48.5 billion, the ministry said

China's Shanghai Composite fell 0.5% to 2,736.10, after rising as high as 2,766.80 earlier in the day. In Shenzhen, the All Share index lost 0.3% to 793.13.

The benchmark Hang Seng Index, which fell during six of the previous seven sessions in Hong Kong, registered a gain of 0.3% to 22,102.01, while the Hang Seng China Enterprises Index rose 0.8% to 11,909.75.

Australia's S&P/ASX 200 dropped down by 0.4% to 5,215.30, giving a large part of its gains after touching 5,305.90 earlier in the day. The backward movement in stocks gains importance as a private measure of Australian inflation jumped to new highs in June as households paid more for petrol and rents, keeping upward pressure on interest rates just a day before a central bank policy meeting.

The TD Securities-Melbourne Institute monthly inflation gauge rose 0.5% in June, after a 0.3% increase in May. Annual inflation accelerated to 4.8%, from 4.5 %, the highest in the five-year history of the series.

Elsewhere, South Korea's Kospi fell 0.6% to 1,674.92 and Singapore's Straits Times Index rose 0.1% to 2,959, while Taiwan's weighted index fell 0.3% to 7,523.54.

The August contract for crude-oil futures climbed as much as $1.34 to $141.55 a barrel in electronic trading, after adding 57 cents to $140.21 a barrel on the New York Mercantile Exchange on Friday. The front-month contract had touched a record high of $142.99 a barrel in electronic trading on Friday.

In currency trading, the 105.53 yen in Asia compared with 106.18 yen earlier in the day and 106.17 yen in New York late Friday. The Japanese yen strengthened against the U.S. dollar after Moody's Investors Service upgraded the rating on Japanese government bonds to Aa3 from A1 with a stable outlook. The upgrade was prompted by expectations of continued fiscal restraint and consolidation, coupled with an easing-out of the debilitating effects of deflation," Moody's Senior Vice President Thomas Byrne wrote in a statement.

On Wall Street, the Dow Jones Industrial Average fell 106 points to 11,346 and the Nasdaq Composite dipped 5.7 points to 2,315, while the S&P 500 index fell 4.8 points to 1,278.

Moving towards European markets which moved broadly lower in the final trading session of the quarter, with shares of Swedish telecoms operator TeliaSonera down sharply after France Telecom decided to walk away without making a formal offer.

Among the main European indexes, the French CAC fell 0.2% to 4,387.17 and the German DAX 30 dipped 0.8% at 6,370.62. Meanwhile the U.K. FTSE 100 gained 0.2% at 5,541.60.

Meanwhile on the economic front the day was sounds good either as Euro-zone consumer prices surged in June, hitting a new record high Monday and probably increasing the European Central Bank's hawkish bias ahead of its rate-setting meeting.

The flash estimate of the annual rate of euro-zone inflation was 4.0% in June, up from May's 3.7%, and ahead of expectations of 3.9%.

The inflation rate's latest surge marks a new record high for the measure, which is at its highest level since Euro stat began collecting data in 1997.

Following the news markets tanked further. At 9.35 GMT the U.K's FTSE 100 was at 5,541.60 with a gain of 0.2%. However the French CAC fell further by 0.5% to 4,375.32 while the German DAX 30 tanked by 1.6% at 6,323.33.

Following the regional trend, the Italian producer price growth in May registered its fastest rise since the index began, driven by rising energy and food prices.

On the year, producer prices rose 7.5% in May, up from a 6.3% rise in April. On the month the index rose 1.5%, compared with a 0.4% rise in April. Both increases were the highest ever recorded since the index began in January 2003.

In U.K. mortgage approvals slumped in May, dropping more than a quarter to a fresh record low, while net mortgage lending fell to its weakest level in more than six years last month underlining the troubles in the U.K. housing market.

Mortgage approvals, which were already at a record low of 58,000 in April, fell to 42,000 in May, the lowest number since the series began in 1999. May's drop of 16,000 was the largest monthly decline in mortgage approvals on record.

Looking ahead the day is scheduled to release Canada’s GDP figure followed by Chicago’s PMI index for June. In the late night we will have Tankan survey for large manufacturing index and non-manufacturing index.