Market players were also keen to see how Wall Street reacts after U.S. President Barack Obama proposed to rebuild U.S. infrastructure with an initial $50 billion investment and prepared new business tax cuts. U.S. stock futures were down 0.3 percent after markets were closed on Monday for Labor Day.
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The Nikkei ended the day down 75.32 points at 9,226.00. Its 25-day moving average, currently around 9,210, is considered a proxy for a one-month moving average and is closely watched in Japan. The Nikkei has recovered about 5 percent this month following a 7.5 percent slide in August but remains one of the worst-performing major world stock markets this year, hurt by worries about the impact of the yen’s strength on corporate earnings and the fragile economic recovery.

The broader Topix fell 0.5 percent to 834.92. The impact was muted from the Bank of Japan’s decision to keep monetary policy unchanged. After easing policy just last week, the central bank kept interest rates on hold at 0.1 percent as widely expected. At a post-meeting news conference, Governor Masaaki Shirakawa said the central bank would carefully watch the yen’s impact on Japan’s economy, but said it was wrong to judge the success of its policy actions based on short-term market moves alone.

The dollar traded at 83.85 yen, within sight of a 15-year low of 83.58 yen hit on electronic trading platform EBS late last month. After the 25-day moving average, the Nikkei’s next downward target is seen at 9,126, around its five-day moving average, and then at 9,053, its “tenkan sen” on daily Ichimoku charts, an indicator of short-term trends. Ichimoku charts are popular with Japanese traders. The Nikkei’s resistance lies at 9,408, its 13-week moving average, and around 9,460, where the bottom of its Ichimoku cloud lies.
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With Wall Street closed for a holiday, however, trading was expected to remain light.

Markets took heart after official data last week showed private employers in the US added 67,000 jobs in August, more than analysts expected.

The figure bolstered optimism that the US will maintain a slow but steady recovery from last year’s recession and avoid another economic contraction later this year.

By mid-afternoon in Europe, Britain’s FTSE 100 index was up 0.3 percent at 5,446.17, Germany’s DAX was 0.3 percent higher at 6,153.31 and France’s CAC-40 was up 0.3 percent at 3,684.20. Asian indexes closed higher and trading on Wall Street was to remain shut for Labor Day weekend after closing higher on Friday.

With most major governments reining in economic stimulus measures and many pushing through austerity spending cuts to reduce deficits, investors worry the global economy would be pushed into a double dip recession, particularly as the US slows down quickly.

Because the US economy is the world’s largest and consumer spending there accounts for a fifth of global economic activity, the stronger-than-expected jobs data on Friday helped calm investors’ frayed nerves after weeks of worrying indicators.

“The renewed flight to safety we have witnessed over the past month is overdone and risks an equally large reversal when the worries over a double dip subside,” analysts from Rabobank said in a report.

“As the unexciting, steady and below-trend global recovery continues, it’s important not to confuse it with a double dip recession.”

Japan’s benchmark Nikkei 225 stock index climbed 2.1 percent, or 187.19, to 9,301.32 and South Korea’s Kospi rose 0.7 percent to 1,792.42.

Hong Kong’s Hang Seng index added 1.8 percent to 21,355.77. Australia’s S&P/ASX 200 gained 0.8 percent at 4,575.50. Markets in mainland China, Taiwan, India, Indonesia and Singapore were also higher.

The Dow Jones industrial average jumped 1.2 percent to close at 10,447.93 on Friday. The broader Standard & Poor’s 500 Index rose 1.3 percent to 1,104.51.

Shares in the US ended the week in the positive, the first time that has happened in a month. The early gains in September mark a stark turnaround from August trade, when shares fell on doubts about the global economic recovery.

The dollar fell to 84.24 yen from 84.27 yen on Friday. The euro was slightly lower at $1.2880 from $1.2895.

Benchmark oil for October delivery was down 40 cents at $74.20 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 42 cents to settle at $74.60 on Friday.
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Indian markets had opened marginally higher on Friday, tracking a rise in Asian stocks on the back of an unexpected growth of 5.2 per cent in US home sales in July and fall in initial jobless claims.

The advance was led by realty, with the BSE Realty Index higher by 1.15 per cent. IT, which was lower in Thursday’s session, bounced back to trade in the positive. Auto, telecom & entertainment, healthcare, consumer durables, metals, power and capital goods were the other gainers. Banking, FMCG and oil & gas were lower.

At 9:47 am, Nifty was at 5488, hanging by just 1.85 points gain or o.03 per cent. The National Stock Exchange benchmark opened the day at 5486.30 against Thursday’s close of 5486.15. The 50-share index recorded a high of 5510.40 versus a low of 5484.20.

Sensex was at 18,263.23, though up 24.92 points or 0.14 per cent, off the earlier high of 18,316.32. The Bombay Stock Exchange sensitive index opened the session flat at 18,238.08 versus the previous close of 18,238.31.
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The benchmark Nikkei gained 135.82 points to 9,062.84. It rose 1.2 percent on Wednesday, after falling as low as 8,796.45, its lowest since April 2009. The broader Topix climbed 1 percent to 819.42.
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Japan’s Nikkei index had soared more than three percent by the break as the BoJ held an emergency meeting in response to concerted government pressure to address the yen’s continuing strength.

But the market ended 1.76 percent, or 158.20 points, higher at 9,149.26 as dealers were unimpressed with the bank’s measures, while the yen, which tumbled to 85.74 against the dollar in the morning, rose to 85.41 in the afternoon.

However, the dollar, which hit a 15-year low against the yen last week, is still up from 85.19 yen in New York late Friday.

The Japanese unit was also at 108.74 to the euro after rallying to 109.55 earlier.

Markets began the day on a high after Federal Reserve chief Ben Bernanke reassured the country that he was ready to step in if the US recovery faltered, lifting hopes for the global outlook.

But the BoJ’s policy measures took the steam out of the rally.

The central bank said Monday that it would offer around 10 trillion yen (118 billion dollars) in six-month low interest loans in addition to the 20 trillion yen of an existing three-month loan programme that started in December.

The move would help lower rates in the market place with a view to easing the yen’s strength, said the bank, which also left its key interest rate unchanged at 0.1 percent.

However, Susumu Kato, chief economist at Calyon Capital Markets Asia, told Dow Jones Newswires: “The market was expecting something more drastic, like monetary easing in quantitative terms.”

Prime Minister Naoto Kan was due to meet BoJ governor Masaaki Shirakawa later Monday to discuss foreign exchange rates and measures to boost the economy.

The quickly arranged meeting came as the government prepared a set of measures aimed at boosting the economy, which has been beset by deflation.

Kan said Friday that the government would “implement policy measures that will be immediately effective and have a high potential of creating jobs”.

Other regional markets were up after Bernanke’s comments on the US economy.

Hong Kong rose 0.71 percent by the break, while Shanghai added 1.51 percent.

Sydney ended 1.89 percent, or 82.6 points, higher at 4,452.7 while Seoul closed up 1.77 percent, or 30.57 points, at 1,760.13.

Wall Street provided a strong cue, with the Dow jumping 1.65 percent after Bernanke’s comments Friday that the Fed would take more “unconventional” steps to boost growth if the US economic outlook “deteriorated significantly”.

He said the pace of recovery and employment was weaker than expected but added that prospects for growth picking up in 2011 appeared to “remain in place”.

“The tone (of Bernanke’s comments) was he would do everything to support the US economy, which potentially implies some quantitative easing,” Hamilton Hindin Greene Broker James Smalley in Wellington said.

He added that the markets had taken the statement “very well and that has flowed through into our market”.

The Fed chief was talking after the government slashed second quarter growth in the world’s largest economy to 1.6 percent, sharply lower than the 2.4 percent projected earlier.

However, it was slightly better than the 1.4 percent forecast by economists.

Oil prices gained, with New York’s main contract, light sweet crude for delivery in October, rising 21 cents to 75.38 dollars a barrel.

Brent North Sea crude for delivery in October advanced 18 cents to 76.83 dollars.
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Tokyo’s Nikkei index ended the day up 0.95 percent, or 84.58 points, at 8.991,06, after a four-day losing streak. Amid a recovery for exporters, Toyota gained 0.44 percent despite announcing the recall of 1.13 million of its popular Corolla vehicles in North America.

Sydney’s S&P/ASX 200 also recovered, ending up 0.32 percent, while Shanghai rose 0.28 percent, or 7.26 points, to 2,610.74. But Hong Kong closed down just 14.71 points at 20,597.35, its sixth session of declines.

Markets tanked at the start of the day after Wall Street tumbled on Thursday as traders braced for a sharp downward revision of US growth later on Friday.

However there were hopes that a conference of central bankers in the US might point the way out of a potential double-dip recession and in turn give comfort to major exporters such as Japan.

Tokyo was also buoyed by the prospect of comments by Prime Minister Naoto Kan addressing the country’s fading recovery. In the event he promised to outline measures on Tuesday.

“Excessive volatility in currency markets negatively affects economic and financial stability and I recognise its gravity,” he said.

“I will take determined steps when necessary,” said Kan, who has few options for reducing the yen’s value but is under growing pressure over the economy and faces a challenge to his leadership from “shadow shogun” Ichiro Ozawa.

In New York the blue-chip Dow Jones Industrial Average closed below the sensitive 10,000 level for the first time in nearly two months, dropping 0.74 percent to 9,985.81.

Compounding Japanese pessimism, data showed that deflation remained entrenched in July, with the core consumer price index falling 1.1 percent from a year earlier, its 17th straight month of decline.

In one bright spot, Japan’s unemployment rate edged lower to 5.2 percent in July, its first fall in six months and a 0.1 percentage point drop from June.

Meanwhile in Shanghai, sentiment was boosted by strong results from oil companies such as PetroChina and China Oilfield Services and an assurance of stable economic policy for the rest of the year from Finance Minister Xie Xuren.

The dollar firmed against the yen on the hopes of action by Japanese authorities.
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The benchmark Nikkei slipped 1.5 percent to 8,983.93 points shortly after the opening, its lowest since May 2009, while the broader Topix declined 1.2 percent to 814.68.

The 9,000 to 9,100 area had been strong support for the Nikkei index since last year, halting several recent attempts to break through on the downside, but worries about Japan’s economic recovery, heightened by the yen’s climb this month to a 15-year high against the dollar, put persistent pressure on stocks.
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“The sell-off in overseas markets weighed on the investor sentiment,” said Neeraj Dewan, director of Quantum Securities, New Delhi. “The undertone of the market continues to be positive on strong liquidity and economic growth outlook.”

For the week, the stock market rose 1.3% — its third consecutive weekly rise. The index had hit 18475.27 points during trade on Thursday, its highest since February 2008.

The index is up 5.4% so far this year outperforming regional peers such as Japan’s Nikkei and Hong Kong’s Hang Seng index that are down 13% and 4%, respectively.

So far this year, foreign institutional funds have invested a net $11.8 billion in shares, adding to last year’s record $17.5-billion inflows, lured by strong economic growth and corporate earnings outlook.

India’s economy, Asia’s third-largest, is forecast to expand 8.5% this year, the fastest pace among major economies after China, while the developed world struggles to keep recovery on track.

Shares in Infosys, India’s No. 2 software services exporter, fell 1.2% to Rs 2,769.20 and third-ranked Wipro ended 1.8% lower at Rs 411.65. Infosys and Wipro earn more than half their revenue from the United States. Bank counters, which had seen positive momentum in the past few sessions on a firm demand outlook, also took a breather in select stocks. India’s No. 2 lender, ICICI Bank, fell 1.8% to Rs 994.50.

Larsen & Toubro, the largest engineering and construction firm, rose 2.8% to Rs 1,869. Dealers said the rise was helped by the cabinet’s clearing of changes to a bill aimed at opening up the $150-billion nuclear power market.

In April, Larsen & Toubro had signed a preliminary agreement with British power system company Rolls-Royce to explore opportunities in nuclear power.

State-owned Bharat Petroleum Corporation ended 3.2% higher at Rs 697.85 after the company said it had agreed to buy stakes in Australian shale gas assets from Norwest Energy. In the broader market on Friday, losers were ahead of gainers in the ratio of 1.2:1 on a total volume of 428 million shares.

The broader 50-share NSE index ended 0.17% lower at 5530.65 points.
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Weighing the indices down were banking, IT and telecom stocks.

Earlier, the index had moved up into the green briefly from it’s opening lows.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened at 18,444.24 points, was at 18,384.19 points, 70.75 points or 0.38 percent down from its previous close at 18,454.94 points.

At the National Stock Exchange (NSE), the broader 50-share S&P CNX Nifty was ruling 0.29 percent lower at 5,524.4 points.

Broader markets indices were also subdued, with the BSE midcap index 0.19 percent down and the BSE smallcap index trading 0.23 percent higher.

The market breadth was tilted towards the negative with 1,395 scrips advancing, compared to 1,402 stocks declining and 108 remaining unchanged.

Other major Asian bourses were in the red, taking cues from Wall Street’s decline Thursday and ahead of the release of US job data Friday, which analysts said could come in poorer than expected.

The Japanese Nikkei closed 1.96 percent lower at 9,179.38 points while Hong Kong’s Hang Seng was down 0.71 percent at 20,922.46 points.

The Chinese Shanghai Composite index was trading 1.28 percent down at 2,653.58 points.
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But the Nikkei pared earlier losses after a government source told Reuters that Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa are likely to meet next Monday, sending dollar/yen slightly higher.

The source said the meeting may be pushed forward to later this week, depending on market developments.

The benchmark Nikkei lost 34.99 points to 9,161.68, its lowest finish since Nov. 27 last year. It earlier fell as far as 9,084.24,
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