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Asian markets mixed after Japan rate cut
(Agencies)
Updated: 2008-12-19 15:29

HONG KONG – Asian stocks were mixed Friday after Japan slashed interest rates to almost zero as central banks around the world seek to flood the markets with cheap money to support a troubled global economy.

Related readings:
  Japan central bank cuts interest rate to 0.1%
The Bank of Japan lowered its key rate from 0.3 percent to 0.1 percent after a near-unanimous vote by its policy board announced in the afternoon.

Pressure to cut Japan's main interest rate -- known as the uncollateralized overnight call rate target — had intensified after the US Federal Reserve sliced its own benchmark rate to a range of zero to 0.25 percent -- the lowest level on record. Analysts said the Fed's action left Japan, its exporters reeling and economy already in recession, with little choice but to follow suit.

Japan's central bank echoed that bearish view Friday, citing the harsh impact of tumbling exports, weakening domestic demand and job losses.

"Under these circumstances economic conditions have been deteriorating and are likely to increase in severity for the immediate future," the bank said in a statement.

An initial surge in Japanese stocks after the news soon petered out, and the Tokyo's 225 stock average traded lower by 78.71 points, or 0.9 percent, at 8,588.52. The dollar, higher in the morning, weakened against the yen after the bank's announcement.

Hong Kong's Hang Seng Index was trading 0.8 percent lower at 15,378.02 even as Beijing said Friday it would help the territory keep its economy stable amid the global financial crisis.

Markets in mainland China, South Korea, Australia and Singapore traded higher but none posted gains of more than 1 percent.

Energy shares saw heavy selling after oil continued its downward spiral overnight, with the January contract falling as low as $35.98 -- levels last seen in June 2004. Prices recovered some in Asian trade, with light, sweet crude for February delivery up 73 cents to $42.40.

In the US Thursday, markets lost ground amid more downbeat economic news and worries about the rating outlook of industrial powerhouse General Electric Co.

The Dow fell 219.35, or 2.5 percent, to 8,604.99 and the Standard & Poor's 500 index fell 19.14, or 2.1 percent, to 885.28. Futures suggested Wall Street would open lower on Friday with Dow futures down 47 points, or 0.5 percent, at 8,690 and S&P500 futures off 6.6 points, or 0.7 percent, at 885.90.

In currencies, the dollar fell to 89.19 yen, down from 89.51. The euro traded at 1.4259.