Asian markets finished mixed Thursday after an early rally gave way to a selloff in the afternoon in Hong Kong and India after investment bank Societe Generale said it has uncovered a trading fraud worth 4.8 billion euros ($7.1 billion).

The Hang Seng closed down 550 points, or 2.3%, at 23,539, so it is still in bull market territory but sharply lower than the day's high of 24,966, while the Indian Bombay Sensitive Index slumped 372 points, or 2.1%, to 17,221.

Markets in Japan were higher, as a weaker yen helped exporters push the Nikkei up 263 points, or 2%, to 13,092. The dollar was buying 106.38 yen vs. 105.75 earlier in the session.

"Guys are covering shorts, and there's no unloading," says Bryan Watkins, a trader at Daiwa Bank in Hong Kong. "It's just punters right now."

Watkins adds that the selloff earlier this week had mostly been short position traders placing bets on a falling Hang Seng, rather than hedge funds unloading positions due to panic selling.

Despite negative real interest rates in Hong Kong, due to the Hong Kong Monetary Authority's recent 75 basis point interest rate cut, property stocks were mixed.

Cheung Kong


shed 6%, to HK$122.20, while

Hang Lung Properties


was 1.4% higher, at HK$29.90. Conglomerate



fell 3%, to HK$75.60.

"The negative real interest rates could stimulate another artificial boom in the property market," says Ajay Dayal, an Emerging Market product specialist for ABN Amro in London. "Properties are yielding more than bonds in some cases now."

Despite the fall in the Hang Seng,

Hong Kong Exchanges


leapt 4.3%, to HK$176.40, and not all the banks followed SocGen's gloomy news either:

HSBC Holdings


fell 0.7%, to HK$115.40, but

Sun Hung Kai

soared 12%, to HK$8.57.

Telecoms were mostly lower.

China Mobile

(CHL) - Get Report

slipped 3.5%, to HK$116.10,

China Telecom

(CHA) - Get Report

dropped 3.4%, to HK$5.64.

China Unicom

(CHU) - Get Report

eased 0.9%, to HK$16.88, but

China Netcom

(CN) - Get Report

jumped 4.8%, to HK$22.80.

ADRs in

(SOHU) - Get Report

were gaining 5.6%, to 28.75 euros, while

(BIDU) - Get Report

was leaping 9.3%, to 188.24 euros in morning trading in Frankfurt.

In China, the Shanghai Composite Index rose 15 points, or 0.3%, to 4717, after fiscal data was released midday.

Beijing announced that China's GDP grew by 11.4% in 2007, about 200 basis points higher than expectations. GDP grew to 24.66 trillion yuan, or $3.43 trillion. Inflation also rose to its highest level in more than ten years, at 4.8% for the year.

The announcement of China's economic data for last year created mixed reactions in equity trading.

Leading the mainland gainers was

Sinopec Shanghai Petrochemical

( SHL), which jumped 5%, to 13.98 yuan, while


(PTR) - Get Report

lost 1.3%, to 26.01 yuan.

In Japan, most shares fell off their morning highs towards the end of the day, but the big exporters such as


(CAJ) - Get Report



(HMC) - Get Report



(SNE) - Get Report

closed higher, and financials fared well, too.

Canon rose 4.8%, to 4550 yen, while Honda advanced 2%, to 3070 yen, and Sony inched up 0.4%, to 4990 yen.

Among megabanks,

Mitsubishi UFJ


climbed 7.5%, to 964 yen, while

Sumitomo Mitsui Financial

( SMFJY) rose 1.9%, to 582 yen.

Despite some of the losses, Asian market participants are more bullish than they were last week, since many still expect a 50 basis point interest rate cut in the U.S. to follow soon, and some say now that Chinese domestic growth may continue to stabilize equity prices around current levels.

"The huge domestic growth drivers of China and India are keeping things afloat, and things have steadied there much more than people thought, given the high valuations," says ABN Amro's Dayal.

Other markets were up too, as the Kospi rose 34 points, or 2.1%, to 1663, and the Taiex climbed 108 points, or 1.5%, to 7517.

Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at

. He lives in New York.