Asian stocks witness nervous trades

Chinese rate hike continues to keep sentiments wounded



Asian markets edged lower in nervous trades today as the China rate hike took another toll on an active session as most of the major global indices were at work for the first time in nearly one week. Chinese markets fell further today and investors looked at the probable slowdown in the world's fastest growing economy as a pretext to sell ahead of the year-end even as the Eurozone PIIGS worries stayed off the course. The central People's Bank of China hiked its one-year lending and deposit rates by 25 basis points each as it struggles to curb borrowing, rein in property prices and tame inflation. Markets are worried that a tighter monetary policy by Beijing will restrict growth, which could have a knock-on effect for many other countries. Meanwhile, yesterday, the US stocks began the week in a lackluster manner after an extended weekend. Lower volumes kept lid on the action and the Dow slid by 18.46 points or 0.2% to close at 11,555.03. Australia and New Zealand markets were closed for bank holidays today.

The Japanese equities closed in red as traders resorted to profit taking amid uncertain global cues and thin trading volume. Strong economic data was seemingly ignored and the benchmark Nikkei 225 Index lost 63.36 points, or 0.61% to close at 10,293, closing under the 10300 mark. On the economic front, a preliminary report released by the Ministry of Economy, Trade and Industry revealed that industrial production in Japan was up a seasonally adjusted 1.0% in November compared to the previous month, rising of the first time in six months. On an annual basis, industrial production added 5.8% - again topping forecasts for a 5.5% increase following the 4.3% gain in the previous month.

The Chinese equities fell further today as selling pressure extended after the recent slide. China's key stock index closed down 1.72% to 2733 points today- its lowest closing level in nearly three months, extending the previous session's nearly 2 per cent drop in the wake of Saturday's surprise interest rate hike. The market is also suffering from a seasonal, year-end liquidity shortage, reflected by the benchmark money market rate heading for the highest level in three years.

In Mumbai, the key benchmark indices provisionally closed flat in a lackluster trade and thin turnover as market participation was low from institutional investors ahead of holiday season. In global cues, European stocks and US index futures edged higher while Asian stocks closed mixed. The BSE 30-share Sensex was provisionally up 3.94 points or 0.02% to 20,032.87, above the psychological 20,000 mark after slipping below it in afternoon trade. But, the S&P CNX Nifty was down 2.35 points or 0.04% at 5,995.75, below the 6,000 mark.

In other markets, South Korea's Seoul Composite added 0.55%, Singapore's Straits Times edged up 0.77% while Taiwan's Taiex dropped 0.24%. US dollar continued to ease while commodities paced on. Light sweet crude oil futures for February delivery stayed above $91 a barrel in electronic trading while gold soared to $1395 per ounce.