China bank measures dent markets

HONG KONG: Asian stocks got off to a mixed start on Monday, with Hong Kong and Shanghai deflated by China's hiking of its reserve requirement ratio for banks, but Tokyo buoyed by a surge on Wall Street.

The Shanghai Composite Index was 2.10 percent lower in the morning, while Hong Kong was flat. Sydney's S&P/ASX 200 was down around half a percent, but Tokyo's Nikkei was up 0.36 percent.

China's central bank said Friday it would raise the amount of money that lenders must keep in reserve by 50 basis points on January 20, the latest in a series of such hikes aimed at reining in inflation.

The move raised expectations in some quarters of further measures ahead to cool the economy, after the central bike hiked interest rates last month for the second time in less than three months.

Property and banking stocks led the losses. Official data out Monday showed that property prices in China's major cities posted their fourth straight month-on-month rise in December.

"The consumer price index is likely to rebound in January due to strong holiday demand after an expected slower growth in December, so the likelihood of another interest rate hike is still high," Zhang Yanbin, an analyst at Zheshang Securities, told Dow Jones Newswires.

In Australia, Sydney was dragged down by mining stocks, after the market appeared to shrug off the country's devastating floods for much of last week.

Japanese stocks however were lifted by a bullish performance by Wall Street last week, which served to strengthen the dollar against the yen, giving a particular boost to exporters.

Wall Street capped a seventh straight week of gains at highs not seen since 2007-2008 on Friday as the corporate earnings season got off to a stronger-than-expected start. US markets are closed on Monday for a holiday.

On currency markets, the euro was lower versus other major currencies in Asia as traders took a cautious stance before a meeting of eurozone finance ministers, dealers said. The ministers will meet with opinion divided over calls to expand a debt rescue fund to bury market fears about the fate of vulnerable countries such as Portugal and Spain.

The euro retreated to $1.3343 in Tokyo morning trade from $1.3382 in New York late Friday. The single European currency also eased to 110.60 yen from 110.90. The dollar fetched 82.90 yen, against 82.94 in late New York trading.

Oil markets were mixed amid expectations that prices could soon hit $100 a barrel, analysts said. New York's main contract, light sweet crude for February delivery, eased two cents to $91.52 a barrel. Brent North Sea crude for March was five cents higher at $98.43.

Gold opened at $1,364.00-$1,365.00 an ounce in Hong Kong, down from Friday's finish of $1,373.50-$1,374.50.