Asia sails on tide of economic optimism

Japan`s stocks, ignoring a humiliating downgrade of the country`s debt, cruised to a higher close yesterday and other Asian markets were buoyed by optimism their corporate flagships were sailing on fresh economic breezes.

Ratings agency Standard & Poor`s downgrade of Japan`s sovereign debt ratings - giving it the lowest credit rating of the Group of Seven economies - briefly rocked the yen. But as anticipated, the yen soon recouped the lost ground.

"I think they`re pointing out the risk factors in the Japanese economy, including the bad loan problem and restoration of fiscal discipline," Economics Minister Heizo Takenaka said.

Dealers said the market would sit tight ahead of US Federal Reserve Chairman Alan Greenspan`s testimony to Congress today and a weekend Group of Seven meeting.

The emerging debt market steamed ahead after China announced it would tap global markets for sovereign debt issues in 2002. The market had been wallowing a bit over the Japanese debt downgrade and uncertainties in the oil market.

Investors are likely to clamber aboard any sovereign offering from Beijing, given the scarcity of such assets in fast growing China, analysts said.

Upbeat earnings forecasts in the US technology sector helped lift the tech-sensitive Nikkei average 1.88 per cent higher to 11,346.66 in subdued trade.

"Earnings from big shots such as Intel and Motorola are just ahead of us. That`s making it very difficult for us to take action," said Takehiko Takachio, senior portfolio manager at Kokuasi Asset Management.

Australian shares closed higher, basking in local economic strength and the prospects of a gradual, rather than a quick, rise in interest rates.

The benchmark S&P/ ASX200 index closed 0.55 per cent higher at 3,386.6, led by heavyweight News Corp, Woolworths, the banks and mining giants.

South Korea`s market cruised higher, piloted by blue chips such as Samsung Electronics, the world`s largest memory chipmaker, ahead of its expected record first-quarter earnings due on Friday.

The benchmark KOSPI closed 0.78 per cent higher at 901.29.

The Korean bond market, however, sputtered after the central bank governor signalled interest rate hikes were in the offing to forestall any overheating in an economy expected to grow five to six per cent this year.

China`s hard currency B shares fell yesterday over renewed concern that Beijing would soon allow its citizens to invest in the Hong Kong Stock market.

Oil prices edged lower awaiting key US fuel stocks data while eyeing progress at getting Venezuela`s oil operations back to normal after President Hugo Chavez regained power.

Benchmark US light crude for May slid 10 cents to $24.47 a barrel in Asia, below Monday`s $1.10-rally in New York.