Nikkei hangs onto narrow gains


Mobile phone leader NTT DoCoMo was higher Monday, but No.3 telco Japan Telecom fell

TOKYO, Japan -- Tokyo stocks were narrowly higher by midday Monday, as gains by Japan Airlines and Asahi Bank offset economic weakness and corporate earnings worries.

The benchmark Nikkei 225 average was up 0.27 percent or 27.40 points at 10.243.11. The broader capital-weighted TOPIX index lost 0.13 percent or 1.35 points to 1,029.43.

Most other markets in the region were also higher, although Hong Kong was moving in and out of the red just before the end of the morning session.

In Australia, the benchmark S&P/ASX200 was up 15 points or almost half a percent to 3301.2 on the emphatic third-term victory by John Howard's conservative Liberal-National coalition government at the weekend.

Telco giant Telstra gained 13 cents or 2.67 percent to Aust. $4.99.

New Zealand's Top 40 index was up 0.53 percent to 1968.51, while in Seoul, the Kospi was up 0.3 percent or 1.57 points to 578.32.

Taiwan and Singapore were higher in morning trade.

Following on Wall Street's gains

The strength in the region followed a slightly higher close Friday in the U.S. by both the Dow Jones industrial average (up 0.2 percent) and the Nasdaq composite, which just sneaked into the black with a gain of 0.04 percent.

In Japan, Asahi Bank was the most-heavily traded share on the TSE's first section.

It jumped 8.7 percent to 100 yen after it said over the weekend that it plans to trim bad loans by roughly 200 billion yen ($1.66 billion) in two years through a tie-up with U.S. investment bank Goldman Sachs.

"This may be good for Asahi, but it doesn't change weak economic fundamentals and the fact that no viable policy concerning the sour-loan dilemma has emerged from the government," Hidenori Karaki, equities general manager at Tokyo Mitsubishi Personal Securities, told Reuters news agency.

Other banks stocks were generally higher, as were techs. But auto stocks eased.

JAL, JAS rise on merger reports

Japan Airlines Co Ltd (JAL), Japan's number-one carrier, rose 3.85 percent to 297 yen after it confirmed weekend media reports that it was talking to third-largest Japan Air System Co Ltd about a possible merger.

The Nihon Keizai Shimbun said the two carriers have reached a basic agreement to merge their operations under a holding company to be set up as early as next northern autumn.

"Basically, this is a plus for both firms, but additional restructuring is necessary to make this work," Toshihiro Koizumi, fund manager at Chuo Mitsui Asset Management, told Reuters. "A simple one plus one equals two scenario will not by itself bear fruit."

Japan Air System was up 4.13 percent at 3780 yen, while No.2 carrier All Nippon Airways was unchanged at 317 yen.

Japan Telecom Ltd slid almost 2 percent to 400,000 yen following a report the No.3 telecoms carrier may barely break even or post a parent-only current loss of around 2.0 billion yen in the year ending in March.

Japan Telecom, which declined to comment on the report, previously forecast a 7.5 billion yen current profit on a parent-only basis for the year.

Mobile phone leader NTT DoCoMo was up 1.37 percent to 1.48 million yen, while No. 2 telco KDDI was unchanged from Friday's close at 305,000 yen.

Japan's Cabinet Office said before the open of trade on Monday that Japan's gross domestic product for the April-June quarter shrank by a real 0.7 percent from the previous quarter, rather than the 0.8 percent fall in the initial estimate.

In Hong Kong, HSBC, Cheung Kong and Hutchison Whampoa were all higher in morning trade Monday, but the Hang Seng index was flat, trading just under its Friday close of 10,609.

Reuters contributed to this report.