Asian stocks sustain rally by close

By staff and wire reports

HONG KONG, China -- Asian markets generally moved higher again on Friday. But the region's biggest bourse, Tokyo, dropped on worries about its economy.

It was little surprise when Japan confirmed a recession on Friday, posting a third-quarter drop in gross domestic product of 0.5 percent.

Though the market saw that statistic coming - it was slightly worse than the 0.4 percent drop expected - Tokyo stocks lost their way in afternoon trading.

The benchmark Nikkei index ended down 0.56 percent at 10,796.89.

The broader Topix index showed that technology stocks were propping up the Nikkei. The Topix, which normally moves in a tighter range than the Nikkei, dropped 1.2 percent to 1,045.69.

Banks down on failure fear

Banks were the big drag. As Japan's recession continues, their portfolio of bad loans is likely to grow. Corporate failures are on the increase in the world's second-largest economy.

On Friday, Mizuho Holdings, the world's largest bank by assets, plummeted 6.8 percent to 274,000 yen.

Analysts say the government will have to step in to inject public money into the banks to help with their loans, but both the government and the banks are balking at that move.

There are signs that Japan, which labored through recession for much of the 1990s, could be in a vicious economic spiral, where lower wages cut into spending which cuts into company profits.

Midsize general contractor Aoki Corp. joined a string of corporate failures on Thursday afternoon. That drove down construction stocks again on Friday.

"Aoki's failure is just the beginning," Tetsuya Ishijima, senior investment strategist at Okasan Securities, told Reuters news agency.

The failure of weak companies will be good in the long run, Ishijima said, but means short-term pain.

Still, some technology stocks like Advantest Corp. enjoyed another good run. The chip-testing device maker rose 1.5 percent to 8,750 yen.

Toshiba Corp., the world's second-largest chipmaker after Intel Corp., fell 3.1 percent to 532 yen, after it called off a deal Thursday with Siemens AG to make third-generation phones together.

Australia boosted by News

In Australia, the benchmark ASX/S&P 200 index closed up 0.57 percent at 3,371.8. That put it at its highest close since late August.

Some overseas investors have been reallocating money away from safe havens like Australia, searching for riskier markets that are running right now, like South Korea and Taiwan.

But on Friday, Aussie stocks got a boost from News Corp. The media giant's U.S. ties caused it to rise 4.2 percent to A$16.35.

There's a report News boss Rupert Murdoch is looking to take control of Germany's Kirch Gruppe, though the Financial Times reported the deal is full of problems and months away.

Normandy Mining gained 1 cent to A$1.69 in heavy trade. It is trading above AngloGold's offer of A$1.66 for the company and Newmont Mining's offer of A$1.56 on expectations the bidding will intensify.

New Zealand stocks closed off 0.11 percent at 2,073.15. Telecom New Zealand, the largest listing, ended down 1 cent at NZ$5.09 but fell as low as NZ$5.03 in the day.

One broker said there was little direction, after the Dow Jones dropped 0.15 and Nasdaq rose 0.36 percent in the United States.

Stocks back in black in Korea

Stocks regained their heady pace in South Korea, where they are up more than 50 percent from their September lows.

The Kospi closed up 2.6 percent at 704.50. That's its highest finish since August 30, 2000.

The largest stock, Samsung Electronics, leaped 3.1 percent to 283,500 won. That is also its highest close since August 30, 2000.

Pohang Iron and Steel Co., the world's second largest steel maker, climbed 5.8 percent to 127,000, almost a two-year highpoint.

Taiwan's Taiex index was similarly moved, gaining 2.4 percent to end at 5,333.93. That's a seven-month high for Taipei.

Banks leap in Taiwan

Banks rose 5.5 percent, unusually taking the focus off tech stocks. The electronics subindex rose 1.7 percent.

Investors figure there will be more mergers in the banking industry, where holding company structures have just been approved for listing.

China Development Industrial Bank, the largest investment bank, surged 6.0 percent to T$22.90.

Contract chip No. 2 United Microelectronics Corp. rose 3.6 percent to T$51.50.

But its rival, world contract leader Taiwan Semiconductor Manufacturing Co., fell 0.56 percent to T$88.50. It has gained strongly in recent days.

China's B share markets, open to overseas investors, closed up 1.8 percent in Shanghai and 1.49 percent in Shenzhen.

In Hong Kong, the benchmark Hang Seng index ended up 0.7 percent at 11,832.18.

Property stocks gave the market a boost again, with Sun Hung Kai Properties rising 3.5 percent to HK$65.75. Henderson Land lifted 1.5 percent to HK$33.70.

Bank HSBC, Hong Kong's largest listing, rose 1.3 percent to HK$98.25.

In Singapore, the Straits Times index had regained its morning losses and was trading up 0.2 percent at 1,621.65 in the last hour of trade.

The main Mumbai index for Indian stocks was up 0.48 percent in afternoon trade.

Reuters contributed to this report.