Asian shares mixed as Shanghai shrugs off tightening

HONG KONG: Asian shares were mixed Friday after China tightened monetary policy further in its battle to tame inflation, stoking regional concerns of a slowdown in the world's number two economy.

Beijing late Thursday said it would raise the amount of money banks must hold in reserve for the fifth time this year, effectively limiting the amount they can lend.

The move is the latest by China as it struggles with rising prices.

It came a day after data showed inflation at 5.3 percent in April, slightly off March's 5.4 percent -- which was a 32-month high -- but still well above the government's four percent target.

Tokyo ended the day 0.70 percent, or 67.88 points, lower at 9,648.77 and Seoul closed 0.12 down percent, of 2.57 points, at 2,120.08.

But Sydney gained 0.33 percent, or 15.3 points, to 4,711.4.

Hong Kong was up 0.38 percent in afternoon trade, while Shanghai rose 0.85 percent, with analysts saying the reserve requirement hike had been widely expected.

However, Southwest Securities analyst Zhang Gang told Dow Jones Newswires: "The broad market's downward trend remains intact because of... the negative impact of China's monetary tightening on the real estate sector."

The rise in the reserve requirement ratio follows four interest rate hikes by Beijing since October and raises concerns in other regional countries, which rely heavily on China's blistering growth to help propel their own economies.

Seoul edged down after the central Bank of Korea said it would keep interest rates on hold at three percent despite growing inflationary pressures.

Analysts said the bank may have been swayed by growing economic uncertainty at home and overseas, including the ongoing debt crisis in the eurozone.

Asian investors were given a good cue from Wall Street, where shares rose in line with a recovery in commodity prices.

The Dow rose 0.52 percent, the S&P 500 0.49 percent and the tech-heavy Nasdaq added 0.63 percent.

Global markets have suffered heavy losses recently as big falls in the price of commodities such as oil stoked fears that less demand means the global recovery is weaker than thought.

On oil markets, crude eased after posting gains on Thursday in New York.

New York's main contract, light sweet crude for delivery in June, lost 28 cents to $98.69 a barrel in afternoon trade, while Brent North Sea crude for June delivery was down 10 cents to $112.88.

Despite their falls, both contracts are well up on last Friday's prices, when WTI hit a multi-month low at $94.63, while Brent was as $105.15.

Falling equities and oil prices sent the euro lower as dealers sought safer haven currencies.

The euro eased to $1.4228 in the afternoon, from 1.4244 in New York late Thursday. The single European currency also fell to 114.69 yen from 115.27 while the dollar dropped to 80.59 yen, compared with 80.95 yen.

Gold opened at $1,503.50-$1,504.50 an ounce in Hong Kong, up from Thursday's finish of $1,495.00-$1,496.00.

In other markets:

-- Taipei shed 0.30 percent, or 27.07 points, to end at 9,006.61.

TSMC rose 0.26 percent to Tw$75.9 while Formosa Plastics fell 0.87 percent to Tw$114.0.

-- Manila closed 0.46 percent, or 19.90 points, lower at 4,292.11.

Lepanto Mining (LC.PH) ended down 7.9 percent at 81 centavos and JG Summit Holdings fell 1.8 percent to 27.50 pesos while San Miguel ended up 0.1 percent at 111 pesos and Philex Mining gained 0.2 percent to 19.76 pesos.

-- Wellington ended 0.12 percent, or 4.13 points, off at 3,536.18.

Telecom slipped 1.1 percent to $2.30 and Fletcher Building shed 0.45 percent to NZ$8.92 and Contact Energy was unchanged at NX$5.99.