Oil price retreat lifts Asian stocks

Relief that oil prices had eased back from last week's record highs helped lift Asian stock markets on Monday, although some analysts warned that the gains looked fragile.

Tokyo tracked US markets higher, with the Nikkei 225 Average briefly nosing above 11,000 before easing back to close 0.7 per cent higher at 10,960.97 The broader Topix index was up 0.4 per cent at 1,114.24.

The outperformance of US tech stocks at the end of last week helped lift their Japanese counterparts, with Sony up 1.9 per cent at Y3,770, Sharp rising 2.8 per cent to Y1,558 and TDK gaining 2.8 per cent to Y7,360.

Sea transport stocks put in the best sector performance of the day, rising 3.8 per cent after UBS lifted its share price target for Mitsui OSK Lines, Japan's second largest shipping group.

The broker said on Friday that Mitsui OSK's own revenue forecasts were too conservative, lifting the shares by 3.9 per cent to Y635.

Bridgestone dropped 2.4 per cent to Y2,025 after production at its biggest domestic tyre plant was shut down due to a fire.

Daiei, the struggling retailer, plunged 24.2 per cent to Y207 on reports that the group's main banks had rejected its latest restructuring plan, increasing the possibility it would be sent to the government-backed Industrial Revitalisation Corporation.

Nikko Cordial, one of Japan's big three brokers, fell 1.5 per cent to Y475 after saying on Friday that Travellers, part of Citigroup, would sell its 6 per cent stake in the group.

Oil stocks dropped as the high fuel price from which they benefit slipped down the market agenda. Nippon Oil fell 1.9 per cent to Y677, Showa Shell lost 1.4 per cent to Y970 and Teikoku Oil shed 1.3 per cent to Y591.

Mitsubishi Motors rose 8.4 per cent, its second consecutive substantial gain, as analysts said speculators were focusing on the stock in the wake of vehicle recall scandals and the withdrawal of support from its biggest shareholder.

Hong Kong edged higher as property stocks attracted demand, although activity was relatively subdued. The Hang Seng index ended 0.4 per cent higher at 12,431.77.

Henderson Land, Hong Kong's third-largest property group, rose 1.9 per cent to HK$37.10, while larger rival Cheung Kong added 2.4 per cent to HK$63.50.

Sector leader Sung Hung Kai Properties added 1.1 pe rcent to HK$69.75 following a broker upgrade.

PCCW, the telecoms group, leapt 4.9 per cent to HK$5.35 following reports that it was poised to sell half its fixed-line unit to China Netcom for HK$30bn. The stock has underperformed the Hang Seng index over the past month. Hutchison Whampoa rose 2.6 per cent to HK$59.50 after last week's results from the conglomerate encouraged positive comment from analysts.

Sydney climbed to a two-week high as investors focused on results from retailing group Woolworths. The benchmark S&P/ASX 200 index rose 0.8 per cent to 3,524.0.

Woolworths reported a 12 per cent rise in second-half profit and forecast a 10-15 per earnings cent increase for 2005 fiscal year. Shares rose 1.3 percent to A$12.12.

Bargain-hunting helped News Corp's ordinary shares rise 2.9 per cent to A$11.20. The stock has hovered around multi-month lows over the past few sessions.

Taipei pushed ahead after the government raised its forecast for 2004 economic growth following strong second-quarter data.

The weighted index rose 0.7 per cent to 5,660.97, after gaining more than 4 per cent last week. However, the market is still down about 14 per cent from April, when sentiment began to be to be hit by China's measures to cool its economy.

Index heavyweight Taiwan Semiconductor Manufacturing, the world's biggest contract chipmaker, rose 1.3 per cent to T$47.