Asia closes up on healthy Nikkei gains

By staff and wire reports

HONG KONG, China - Asian stocks climbed out of the basement on Tuesday. Tokyo's Nikkei posted healthy gains a day after falling to 16-year lows.

Stocks also rose in South Korea and New Zealand. But Australia and Hong Kong closed on losses.

Monday's market ebullience over the political change in Indonesia didn't carry through for a second day, with Jakarta down and neighboring Singapore near flat.

But during the day, the Indonesian currency broke through the 10,000 mark against the U.S. dollar for the first time since March. It was trading at 9,800 to the greenback on Tuesday afternoon.

Steps to boost market spur short covering

In Tokyo, the benchmark Nikkei rose a strong 2.4 percent to close at 11,883.25. It was driven by good gains in bank stocks, which bounced back from Monday's heavy losses.

But the market has given up any "Koizumi effect" from the election of a new prime minister, and is trading at March levels. The Nikkei is down 14 percent for the year.

Investors were heartened by the possibility the government may step in to encourage investing. The policy chiefs of the three parties in Koizumi's coalition will meet Wednesday to discuss steps to spur the stock market.

The broader Topix index rose 1.4 percent to 1,179.86 but is still close to its low for the year.

Mizuho Holdings, the world's largest bank by assets, rose 5.0 percent to 442,000 yen, paring Monday's drubbing of over 7 percent.

After plunging about eight percent on Monday, Mitsubishi Financial Group added 3.2 percent to 917,000 yen.

Megabank UFJ Holdings Inc. tacked on 4.4 percent to 551,000 yen.

Traders said Japanese markets were gaining from investors covering short positions ahead of Sunday's Upper House elections. But they still saw Japanese stocks heading down long-term.

Furukawa, select techs gain

Furukawa Electric Co. jumped 8.0 percent to 892 yen.

The Tokyo company confirmed it was in talks to buy the fiber-optic cable plants of U.S.-based Lucent Technologies Inc, with CommScope. The deal would expand its reach, particularly its U.S. operations.

A few techs brushed off Wall Street's overnight drop. Tokyo Electron Ltd. rose for the third day, up 5.2 percent to 7,530 yen.

In Sydney, the Wall Street carry-through pushed the benchmark S&P/ASX 200 index down 0.6 percent at 3,352.6 at the close.

News up on news

The market's biggest stock, media giant News Corp., rose 1.4 percent to A$17.99 after it sold its Fox Family channels to Walt Disney Co for $3 billion.

Building-products group James Hardie Industries rallied 6.6 percent to a record close at A$6.18 after announcing a corporate makeover.

But there were almost three times as many losers as gainers down under.

The world's biggest miner, BHP Billiton, dropped 3.5 percent to A$9.61 on heavy volume. Rio Tinto lost 3.0 percent to A$32.25.

Defensive bank stocks, traditionally a source of fresh legs for an increasingly cautious market, also suffered. Commonwealth Bank of Australia fell 1.2 percent to A$31.20. Macquarie Bank lost 1.7 percent to A$37.60.

New Zealand's benchmark NZSE-40 Capital index rose 0.2 percent to 2,052.78. Traders said the gains were driven by index-related buying.

Telecom New Zealand, the market's biggest stock, rose 1 cent to NZ$5.07.

Hong Kong still hurting

Hong Kong's benchmark Hang Seng index fell 0.2 percent to 12,214.10. It is Asia's worst-performing index in 2001, down 19.1 percent in all.

Chinese oil company CNOOC was a bright spot, climbing 5.3 percent to HK$7.90 on news it will join the 33-stock Hang Seng in August.

China-oriented stocks were performing better than the overall market, which is heavily dependent on U.S. performance.

Small-engine maker Johnson Electric, which gets most of its sales in the United States, fell 1.9 percent.

In South Korea, the benchmark Kospi rose 0.5 percent to 526.62. Overseas investors led the buying.

Hobbled chipmaker Hynix Semiconductor came off its all-time low to close up 10.5 percent at 1,320 won.

SK Telecom, the market's second-biggest stock, rose 2.5 percent to 207,000 won. Korea's biggest stock, Samsung Electronics, closed almost flat, up 500 won at 173,500 won.

Taiwan's markets went back to their losing ways. The benchmark Taiex took off 2.7 percent to close at 4,040.77.

That's almost an eight-year low, the worst close since October 1993.

Prospects continue to get gloomier for the island's growth this year, with its dependence on exports, particularly of computer chips, down heavily.

Experts say it will be lucky to reach 2 percent growth this year.

The installation of founding president Sukarto's daughter, Megawati Sukarnoputri, as Indonesian president has boosted confidence in the rupiah.

Investors say Indonesia's stocks need political stability, too. But there was no follow-on from Monday's big gains.

The Jakarta composite index fell from the 10-month high it set Monday and was down 3.0 percent at 456.374 on Tuesday afternoon.

Stocks in neighboring Singapore saw little benefit, but rallied from morning losses. The benchmark Straits Times index was up 0.2 at 1,630.18 in afternoon trade.

Reuters contributed to this report.