Asian stocks bounce big on merger

Asian markets were making sense of a megamerger that will create a company to rival IBM. For suppliers, they liked what they saw.

By staff and wire reports

HONG KONG, China -- Asian stocks jumped on Tuesday, boosted by the mega-merger of Hewlett-Packard and Compaq Computer.

That boosted suppliers of the two companies in Japan and elsewhere in Asia. Tokyo's Nikkei jumped almost 3.5 percent.

South Korea also rose more than 3 percent, as chipmakers ran with the news of the deal. It will create the world's biggest maker of personal computers, a rival in size and scope to IBM.

Hong Kong closed up more than 2 percent, and Taiwan's chip-driven markets managed almost a percentage point runup. Australia and New Zealand had more muted gains.

Other than the HP-Compaq deal, though, Asian investors focused on domestic themes. They had no lead from U.S. markets, which were closed Monday for the Labor Day holiday.

Stocks in Singapore, where both HP and Compaq have their Asia-Pacific headquarters, were trading up in late afternoon.

Nasdaq hints at higher open

In Japan, the benchmark Nikkei index jumped 3.49 percent to 10,772.59.

It was an exceptionally choppy day's trading. The index fell into the red in morning trade, setting a 17-year low of 10,325.83, after dropping 2.84 percent on Monday.

The broader Topix index, which doesn't rely as much on technology stocks, rose 2.65 percent to 1,100.13.

Japanese investors said they would be watching to see what happens when Wall Street cranks back up on Tuesday. Nasdaq looked set to open higher, judging by its futures.

In Tokyo, Canon Inc., which supplies laser beam printers to Hewlett-Packard as an original equipment manufacturer (OEM), surged 11.24 percent to 3,760 yen.

Analysts said the merger could open up another avenue for the printers, which are often offered with servers when sold.

One head of technology research in the Asia-Pacific region said the HP-Compaq merger looked likely to create a more competitive PC maker.

If anyone loses in the cost cutting, it's likely to be Compaq executives, with HP division heads appointed to run most of the operating units.

But in Asia, the companies don't overlap that much, the analyst said. So suppliers may benefit from another avenue for their products.

Banks up on bailout possibility

Funai Electric Co., which supplies printers to HP rival Lexmark, slid 8.87 percent to 6,470 yen amid concern the deal would spur Compaq to stop bundling its computers with Lexmark printers, to use HP's lines.

Elsewhere, Advantest Corp., which makes chip-testing devices, rocketed up 9.79 percent to 6,950 yen after falling to a near three-year low of 6,330 the previous day.

Mizuho Holdings Inc., the world's largest bank by assets, shot up 9.47 percent to 520,000 yen. Other big banks rose, too, with a leading Liberal Democratic Party official suggesting an injection of public funds into the banking sector was still a possibility.

In Australia, the benchmark S&P/ASX 200 index finished up 0.43 percent at 3,286.4. It was flat most of the day.

The HP-Compaq merger only started to boost Australian stocks in the last hour of trade.

Sydney was also holding its breath ahead of a possible cut in Australian interest rates on Wednesday morning following the Reserve Bank of Australia's meeting on Tuesday.

National Australia Bank recouped some of the previous day's losses. Australia's biggest bank rose 2.6 percent to close at A$29.65, after sliding 13 percent on Monday thanks to a $1.75 billion writedown on its HomeSide Lending assets.

Telecom heavyweight Telstra, the second-biggest stock in Sydney, also spurred the market. It gained 1.6 percent to A$4.95.

Australia's largest listing, media giant News Corp., slipped 0.9 percent to A$15.80, as it awaits the resumption of trading of its co-listing in New York.

In New Zealand, the benchmark NZSE-40 Capital index rose 0.1 percent to 2,044, after being in the red most of the day.

Telecom New Zealand, the largest listing in Wellington, rose 9 cents to NZ$5.04.

China mobile plays rallying in Hong Kong

In Hong Kong, the benchmark Hang Seng Index ended up 2.15 percent at 11,136.86.

China Mobile, the second-biggest Hong Kong listing, jumped 5.97 percent to HK$23.95.

Mainland China's telecom regulator said it has no plans to implement one-way billing this year. China Unicom, its sole rival in China, rose 6.15 percent to HK$9.50.

The stocks have fallen since Mobile came in with disappointing earnings last month. They fell again after a report that China Mobile was planning to implement a "calling party pays" system from October 1 in Beijing and Shanghai.

Property stocks ended in positive territory after the government said it would stop selling new government housing for 10 months and unveiled big cuts in future sales.

But analysts said gains may be limited, as the move had already been widely anticipated

In South Korea, shares got a boost from chip and computer makers. They were up on expectations of increased exports to Hewlett-Packard

The benchmark Kospi closed losed 3.13 percent higher at 558.79.

Ailing memory-chipmaker Hynix Semiconductor, the world's No. 3, rose its daily 15 percent limit to 920 won. The company's creditors are mulling a $3.5 billion refinancing proposal from the company's investment adviser, Salomon Smith Barney.

Seoul's biggest listing, Samsung Electronics, the world's top memory chipmaker, closed up 4.52 percent at 196,500 won.

Daewoo Motor Sales, the listed affiliate of bankrupt Daewoo Motor, rose 4.5 percent to 196,500 won. Investors are waiting for a conclusion to efforts to sell Daewoo to General Motors, expected over the next fortnight.

In Taiwan, the benchmark Taiex rose 0.9 percent to 4,493.53. The chip-heavy index was sagging before it got a huge boost from the HP-Compaq deal.

Both companies have supplier deals with Taiwan. Computer makers Compal Electronics, which ended the day at T$33.70, Asustek Computer, at T$135.50, and Quanta Computer, now at T$82, all rose the daily 7 percent limit.

In Singapore, the Straits Times index was up 0.3 percent at 1,620.32 in afternoon trade.

Reuters contributed to this report.