FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

Nuke Fears Weigh on Seoul Markets

Nuke Fears Weigh on Seoul Markets
Thu Feb 10, 2005 10:35 PM ET
By Christopher Kaufman

SINGAPORE (Reuters) - South Korean shares and the won currency sagged on fears about North Korea's nuclear ambitions and after top computer maker Dell reported slow holiday sales, while concerns about U.S. deficits capped the dollar.

Oil prices steadied around $47 a barrel after jumping 4 percent in New York when the International Energy Agency cut its forecast for non-OPEC supply growth this year, revised upwards estimates of demand and predicted a sharp fall in stocks.

Markets in Japan, China and several other countries were closed for holidays on Friday.

The U.S. dollar stabilized in holiday-thin conditions in Asia after taking little heart from upbeat trade data, but was seen under pressure on concerns about the trade and fiscal deficits.

The U.S. trade deficit surged to a record $617.7 billion in 2004, although the December shortfall narrowed to $56.4 billion from a November deficit revised down to $59.3 billion.

"It was an enormous number for the whole of last year," said Mark Cranfield, head of treasury in Asia at Landesbank Baden-Wuerttemberg in Singapore.

"On a short-term basis, the euro and the yen were pretty oversold, so the trade figures probably allowed some people to book some profits."

The dollar bought 105.66 yen at 9:42 p.m. EST, while the euro was around $1.2873 per dollar, little changed from New York levels.

KOREA CONCERNS

On Thursday, the dollar had hit a three-month high of 106.86 against the yen after North Korea pulled out of multilateral talks with the United States, Japan, China and South Korea and said it possessed nuclear weapons.

Increased tensions in Northeast Asia could hurt the yen and the South Korean won helping boost the dollar, Cranfield said. "The Korean story may turn out to be something worse; it could get nasty," he said.

The won fell to a three-week intraday low versus the dollar early on Friday at 1,038.5.

Seoul shares lost nearly 1 percent, led lower by a 1.4 percent slide on the market's biggest stock, Samsung Electronics, and other blue chips, as investors digested the North Korea news.

U.S. blue chips closed at a 2005 high on Thursday on healthy earnings from top insurer American International Group Inc., but tech stocks barely rose, weighed by disappointing results from telecom equipment maker Ericsson.

Dell, the world's largest personal computer maker, announced a sales forecast for the current quarter that missed analysts' targets, pushing its stock down 3.3 percent in after-hours trade.

The Dow Jones industrial average was up 0.8 percent at 10,749.61. The Nasdaq Composite Index was up 0.03 percent.

Australian stocks edged higher as investors sold banks, the source of bourse strength on Thursday, and bought everything they sold a day earlier.

National Australia Bank, fell nearly 1 percent after a 4 percent rise on its New York listing. Mining giants Rio Tinto and BHP Billiton rose, reflecting gains in base metal prices.

New Zealand's benchmark NZSX-50 Index advanced a touch after its largest listed company, Telecom Corp., rose to its highest price in nearly four years.

Shares in Singapore rose 0.35 percent, led by a 3.3 percent rise in blue chip Singapore Airlines Ltd., the world's second-most valuable airline.

Hopes that the flag-carrier will win long-sought access to lucrative U.S.- Australian routes, fed the gains, traders said.

Spot gold held steady around $417.00 an ounce, in line with the U.S. dollar. Dollar weakness has supported gold by encouraging bullion purchases in other currencies.


LINK: http://www.reuters.com/financeNewsArticle.jhtml?type=businessNews&storyID=7600393