Asian Stocks End Mixed; Nikkei Falls 1.3%

Updated from 1:16 a.m. EST

By Jeremiah Marquez

HONG KONG -- Asian stock markets ended mixed Monday, with Tokyo's index down more than 1%, as a global rally over the $827 billion plan to resuscitate the U.S. economy began to fade.

Stocks have advanced strongly lately on expectations the U.S. measures, expected to pass the Senate Tuesday, will reverse the country's deepest recession in decades by stemming massive job losses and increasing spending.

A coming overhaul of the government's $700 billion financial bailout program, to be detailed by Treasury Secretary Timothy Geithner on Tuesday, also has given sentiment a lift. Among new measures under consideration are guarantees to help banks limit losses from their souring assets.

Yet most markets in Asia gave up some of their gains by the afternoon. Analysts say much of the rise has been fueled by investors looking to capitalize on the markets' momentum, not a fundamental shift in sentiment.

"I don't think this rally will last," said Desmond Tjiang, who helps manage $4 billion in Asian equities as a chief investment officer at Fortis Investment Management in Hong Kong.

"There's still bad macro news and bad corporate news that will outweigh the stimulus hopes in the near term," he said. "After the stimulus package, what other good news can there be? I'm just very cautious."

Japan's Nikkei 225 stock average fell 1.3%, to 7969.03, while South Korea's Kospi was off 0.6% at 1,202.69.

In Hong Kong, the Hang Seng rose 0.9% to 13,780.80 in a volatile session that saw the benchmark turn negative. Boosting Hong Kong was trade in China, where the Shanghai index extended its gains by 2%. The stock measures in Australia ended higher.

In the U.S. Friday, investors looked past abysmal news about the country's job market and instead hoped it would increase pressure on lawmakers to pass the stimulus bill. The Dow Jones Industrial Average rose 217.52, or 2.7%, to 8,280.59 after rising 106 on Thursday.

Broader stock indicators also jumped. The S&P 500 index rose 22.75, or 2.7%, to 868.60.

But Wall Street futures sank Monday, suggesting U.S. markets would shed some of last week's gain.

Markets in London and Frankfurt were trading lower.

In Tokyo, Japan reported a decline in machinery orders and after trading ended Nissan(NSANY Quote) said it was slashing 20,000 jobs and had fallen into the red in the fiscal third quarter. Japan's No. 3 exporter also forecast its first net loss for the full year through March, providing fresh evidence of the pain Asia's exporters are feeling as Western consumers cut back their spending.

"The economic realities in the United States and Japan are so dire that more investors are becoming skeptical over the U.S. economic and financial bailout plans," said Masatoshi Sato, market analyst at Mizuho Investors Securities. "Optimism over the U.S. measures that had supported the market is gone."

Meanwhile, Japan's biggest brokerage firm Nomura Holdings(NMR Quote) tumbled more than 14% on news it might be forced to sell more shares to raise capital.

Oil prices fell, with light, sweet crude for March delivery down 53 cents to $39.64. The contract dropped a dollar to settle at $40.17 a barrel on the New York Mercantile Exchange overnight.

AP Writer Shino Yuasa contributed to this report from Tokyo.