Tokyo - Worries about the spluttering global economy kept Asian markets cautious on Friday, although a Wall Street rebound helped to calm recent panic over the financial crisis.
A drop in oil prices and signs of an improvement in credit markets helped to soothe jitters in the region a day after a fierce selloff that left Tokyo reeling from its worst loss in two decades.
But worries about the worsening health of the world economy continued to dampen the mood despite moves by world powers to pump billions of dollars into shaky markets and banks teteering on the brink of collapse.
"Despite worldwide efforts to stabilise financial markets, fears the global economy is headed for recession continue to reverberate" around the world, noted NAB Capital economist David De Garis.
Japan's Nikkei index was up 1.53% by the lunch break, off its earlier highs. It was a relatively modest rebound after Thursday's plunge of more than 11%, which was the biggest loss in two decades.
"Market players remain cautious ahead of the weekend," said Toshihiko Matsuno, head of research at SMBC Friend Securities, noting that a raft of US and Japanese corporate earnings reports are looming on the horizon.
"We all know that companies are not doing well. What we don't know is how bad their reports could be," he said.
Hong Kong shares slipped 0.8% at the open while Shanghai posted a gain of 0.6%. Sydney was down 0.3% shortly after midday, after an early rally fizzled out. Seoul dipped 0.2%, shedding early gains.
Failed to boost sentiment
"We started off on a great rush but it's really turned out to be a damp squib," said Bell Potter Securities senior client adviser Stuart Smith in Australia.
Overnight on Wall Street, the Dow Jones Industrial Average jumped 401.35 points, a day after its steepest percentage drop since 1987.
Oil prices fell further, with New York crude settling below $70 a barrel for the first time since August 2007, providing some comfort to investors worried about the outlook for the economy and corporate earnings.
There were also fresh signs of a thaw in credit markets, which encouraged some bargain hunting after recent heavy losses.
But most investors in Asia were reluctant to buy against such an uncertain outlook for the global economy and markets, which have been battered by a credit crunch that has shaken confidence in the global financial system.
"Investors tend to perceive the US financial system woes have become global. So, the Wall Street gains failed to boost sentiment," said an analyst in Taipei where stocks were down 2.20%.
Official figures showed that US industrial production plunged 2.8% in September, the steepest decline since 1974, raising fears of a deep and prolonged downturn in the world's largest economy.
There was also a sharp drop in a regional factory index from the Philadelphia Federal Reserve.
European markets suffered fresh losses on Thursday. The London FTSE 100 index fell 5.35%, the CAC 40 lost 5.92% and Frankfurt's Dax shed 4.91%. Both of Russia's main stock markets dropped more than 9%.
- AFP