2013.06.0402:03:37UTC+00Asian stocks endure volatility; Japan wavers

Most Asian markets endured wide swings between gains and losses Tuesday as buying in the wake of an overnight advance on Wall Street was countered by concerns over China’s growth trajectory.

Japanese shares were the most volatile, as bargain buying in banks and some other beaten-down stocks provided support, even as the U.S. dollar’s drop below the 100-yen level applied further pressure on some exporters.

The Shanghai Composite gave up 0.7%, and Hong Kong’s Hang Seng Index was flat in choppy trading, with analysts considering the outlook after the May surveys on Chinese manufacturing by the government and HSBC offered a contrasting view on factory-level activity.

Barclays economist Jian Chang said the divergence in the pair of monthly Purchasing Managers’ Indexes made it difficult to gauge the strength and direction of the Chinese economy in the near term.

“It is probably fair to say that growth momentum remains soft amid domestic overcapacity, external weakness, uncertain domestic policy and a lack of new stimulus,” Chang said.

South Korea’s Kospi fell 0.4%, while Australia’s S&P/ASX 200 added 0.1% amid caution ahead of the Reserve Bank of Australia’s interest-rate decision.

Most regional stock benchmarks changed direction at least once after stocks on Wall Street advanced overnight, as weak U.S. manufacturing data reinforced some expectations that the Federal Reserve will maintain its bond purchases — a key tailwind for global equities over the past several quarters.

In Japan, the benchmark Nikkei Stock Average rose 0.6% a day after it plunged 3.7%, and the broader Topix gained 0.3%.

But shares of Japanese firms with a significant international exposure lost ground after the dollar dropped below the ¥100 level overnight in the U.S.

Tuesday in Japan, the greenback was buying ¥99.58, after also moving in a wide range.

Japanese bond, stock and currency markets have seen extreme volatility of late amid an increase in the yields on domestic government debt and worries the Fed may pare its asset purchases.

“Between the volatility in the yen and the Japanese equity and bond markets, the Bank of Japan, [which] meets next week, may realistically consider increasing the frequency of asset purchases just to renew the rallies,” BK Asset Management managing director Kathy Lien wrote in a note to clients.

Stock performers

Shares of Toyota Motor Corp. fell 1%, and Mazda Motor Corp. dropped 3.7% in Tokyo.

But banks provided support after the higher U.S. finish, with Mitsubishi UFJ Financial Group Inc. climbing 4.3%, and Sumitomo Mitsui Financial Group Inc. jumping 5.2%.

Shares of Tokyo Electric Power Co. added 0.2% as a report in the Nikkei newspaper said the power utility and 10 other local firms were considering importing coal together in a move that could slash their transport costs.

Among other companies named as part of the plan, Nippon Paper Industries Co. rose 1.8%, but Tohoku Electric Power Co. eased 0.3% lower.

In Sydney, the S&P/ASX 200 dropped further from Monday’s close at a four-month low.

In the heavily weighted financial sector, Westpac Banking Corp. fell 0.4%, while Commonwealth Bank of Australia overcame early losses to climb 0.2%.

Most economists expect Australia’s central bank to hold the key interest rate at 2.75% but to also indicate that future rate cuts are possible.

In Hong Kong and Shanghai, some Chinese property developers pulled back after recent gains, weighing on the broader market.

“Despite a drop in May volume for major cities, our channel check suggests that developers’ pre-sale is generally better than last month. Given soaring land prices, we are concerned about aggressive land banking. We prefer strong players delivering sustainable pre-sale growth,” analysts at Jefferies wrote in a report.

Shares of China Overseas Land & Investment Ltd. fell 1.1% and China Resources Land Ltd. dropped 0.6% in Hong Kong.

Gemdale Corp. lost 1% in Shanghai, and Oceanwide Real Estate Group Co. eased 0.3% in Shenzhen.