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Asian Stocks End Higher; Nikkei Gains 1.4%

The Associated Press

HONG KONG -- Asian stocks ended higher Thursday, but trading was cautious amid gnawing worries about banks after Morgan Stanley (MS) reported worse-than-expected results.

A number of Asian bourses fluctuated and volumes were lackluster. Automakers helped lead the broader market, crude oil prices were flat and the dollar steadied against the yen after a morning fall.

News of U.S. investment firm Morgan Stanley's disappointing quarterly report rattled many investors already nervous about the U.S. government's upcoming "stress tests" of banking health. Reports that Nomura Holdings(NMR), Japan's leading brokerage, has incurred a record net loss of 700 billion yen ($7 billion) in the last fiscal year also weighed.

Analysts said the markets were due for a technical recovery after falling sharply earlier this week. In Japan, an analyst upgrade helped boost automakers like Toyota(TM) and Mazda.

Despite the gains, some investors have begun looking for reasons to book profits following a six-week rally, a shift in sentiment that could lead to declines in the near term, analysts said.

"People are starting to get nervous and we're going to see people starting to take money off the table," said Andrew Orchard, Asian strategist for Royal Bank of Scotland in Hong Kong. "Most investors still have concerns about the economy, and I don't think many are ready to believe we're in the next phase of a bull market."

European stocks were lower in early trading. Britain's FTSE 100 lost 0.3%, Germany's DAX shed 0.8% and France's CAC-40 was off 0.6%. Wall Street futures suggested a higher open in the U.S. on Thursday.

Japanese shares fell before rebounding to trade higher, with the Nikkei 225 average closing up 1.4% to 8,847.01. Hong Kong's Hang Seng was up 2.3%, and South Korea's Kospi added 0.9%.

Elsewhere, stocks in Australia rose and Shanghai's main index was little changed with a 0.1% gain.

Car companies shone across the region. In South Korea, Hyundai climbed 3.2% though it reported a 43% drop in net profit for the first quarter. One bright spot: its global market share rose to 4.7% during the period from 4% the year before.

Japanese auto giant Toyota rose 3.5% after Goldman Sachs upgraded its rating on the company. Mazda added 5.4%

In Hong Kong, shares of PCCW tanked 12.9% after a buyout group led by company Chairman Richard Li abandoned its bid for the telecom firm following a court decision striking down the proposal.

On Wednesday on Wall Street, an early rally fizzled after Morgan Stanley's report, and the Dow Jones Industrial Average lost 82.99, or 1%, to 7,886.57.

Broader market measures were mixed. The S&P 500 index fell 6.53, or 0.8%, to 843.55, while the Nasdaq composite index rose 2.27, or 0.1%, to 1,646.12.

Oil prices were little changed, with benchmark crude for June delivery up 5 cents at $48.90 a barrel, as rising U.S. crude inventories and a grim demand forecast by the IMF hurt sentiment. The contract rose 30 cents Wednesday to settle at $48.85.

The dollar was higher at 98.14 yen from 98.03 yen.