Asian stocks close with gains ahead of Fed

By staff and wire reports

HONG KONG, China -- Asian markets posted modest gains Tuesday, with Japan rising off Monday's low close.

Australia closed with a strong showing late in the day, and New Zealand also broke in the black.

South Korea posted a gain after reporting second-quarter growth figures. Taiwan stocks rose a similar amount, just over a quarter of a percentage point.

But trading was cautious in Asia as investors waited for the U.S. Federal Reserve to meet later Tuesday.

Investors expect a quarter-point interest rate cut out of the Fed. They are waiting for signs of what the Fed will do next.

Hong Kong, Asia's worst performing index this year, ended the day down. Its market is closely tied to the United States, with interest rates and the Hong Kong dollar mapping U.S. movements.

Tokyo up for first time in five days

In Japan, the benchmark Nikkei 225 index ended the day up 0.2 percent at 11,280.38. That was the first rise in five days.

The Nikkei closed at its lowest level since December 1984 on Monday.

The broader Topix index rose 0.3 percent to 1,158.82, as investors looked to the seventh rate cut this year from the Fed.

Rate cuts typically boost bank stocks. Of Japan's big banks, Sumitomo Mitsui Banking Corp. rose 4.56 percent to 985 yen.

UFJ Holdings Inc. gained 4.36 percent to 622,000 yen.

But techs were getting a good run. Chip and computer maker Fujitsu has been especially strong since announcing a restructuring. It rose 2.57 percent Tuesday to 1,277 yen, on top of Monday's 2.81 percent jump.

Fujitsu said Monday it would trim its work force by 16,400, or around 9 percent.

The tech sector's standard-bearer, Sony Corp., continued its slide. it fell 2.79 percent to 5,580 yen, a level not seen since June 1999.

Tokyo's largest stock by market capitalization, cell-phone operator NTT DoCoMo Inc dipped 0.61 percent to 1.62 million yen, a fresh year-to-date closing low.

Honda Motor Co. fell 5.5 percent to 4,450 yen after last week's sudden jump in the yen. Honda derives 45 percent of its sales from the North American market.

Ford's job-cuts announcement, and share-price drop, has also hit home.

In Sydney, News rises

In Sydney, the benchmark S&P ASX/200 index closed up 0.9 percent at 3,319.0 points. Investors were cautious ahead of the U.S. Fed meeting.

The market's largest stock, Rupert Murdoch controlled News Corp., rallied 2.8 percent to A$17.07.

Bionic ear maker Cochlear jumped 2.1 percent A$41.50.

Anglo-Australian miner Rio Tinto rode improving resources sentiment up 80 cents to A$32.05.

South Korean stocks got a boost out of restructuring hopes, and its GDP came in better than other Asian nations

BHP Billiton, which posted essentially flat earnings on Monday in its first filing since merging in June, recovered from a dip to close up 0.5 percent at A$9.18. Again, banking stocks were rising as investors watched the Fed. Commonwealth Bank rose 0.3 percent to A$31.60 ahead of its earnings on Wednesday.

Australia's largest wine producer, Southcorp, lost 1.8 percent to A$7.38 after it reported a full-year net profit of A$215 million.

New Zealand's benchmark NZSE-40 Capital index rose 0.2 percent to 2,036.15. But turnover was thin.

Hong Kong at 28-month low

In Hong Kong, the benchmark Hang Seng Index ended down 0.2 percent at 11,440.35. That's a fresh 28-month low.

It is the worst performing index in Asia this year, with its prospects tied inexorably to the U.S. downturn and a stagnant property market at home.

Li & Fung, Hong Kong's largest trading company, plunged 17.2 percent to HK$9.65, making it the market's biggest loser.

The 95-year-old company reported disappointing earnings, with net profit up a less-than-expected 15 percent.

Li & Fung gets about 70 percent of sales from the United States, selling raw material for retailers such as Levi Strauss and Laura Ashley.

Hong Kong's top cell-phone play in China caught a break. After dropping with disappointing earnings last week, No. 1 China Mobile rose 2.3 percent to HK$27.10.

But rival and No. 2 China Unicom dropped 4.6 percent to HK$10.25.

In South Korea, the benchmark Kospi index ended up 0.28 percent at 568.68.

Finance Minister Jin Nyum has said a deal between Hyundai financial units and insurance giant American International Group is imminent, possibly still coming Tuesday.

Hyundai Securities, one of South Korea's biggest brokerages, rose almost 4 percent to 10,000 won.

Protracted talks

Those talks have dragged on for a year. The Korean government is also pushing along negotiations with General Motors, to buy No. 3 car company Daewoo Motors.

Bankrupt Daewoo's traded affiliate, Daewoo Motor Sales, ended up 3.0 percent at 3,595 won.

On Tuesday, the central bank reported growth at an annualized rate of 2.7 percent for the second quarter.

That was below bank forecasts of 3.3 percent. But South Korea still stacks up better than most Asian economies, because reforms there are further along, experts say.

In Taiwan, the benchmark Taiex rose 0.3 percent to 4,562.73.

Electronics stocks, which drive the market, led the way. The subindex rose 0.5 percent. Banks rose early but ended down 0.1 percent.

Taiwan's biggest stock, world contract chip No. 1 Taiwan Semiconductor Manufacturing, rose 0.8 percent to T$66.50.

Rival United Microelectronics rose 1.8 percent to T$38.70.

Trading was heavy in Chinatrust Commercial Bank, one of Taiwan's biggest commercial banks, which fell 1.8 percent to T$21.60.

In Singapore, the benchmark Straits Times index was up 0.2 percent at 1,629.54 in afternoon trade. Investors were edgy, particularly with technology stocks, and waiting for the Fed.

Reuters contributed to this report.