Most Asian markets rose modestly Tuesday but trimmed their early gains, as optimism over billions of dollars in new stimulus measures in Japan and Australia gave way to concerns about the sputtering global economy. European markets were mixed in early trade.
In Tokyo, stocks got a jolt after the Bank of Japan said it would buy 1 trillion yen ($11.2 billion) in corporate shares held by financial institutions to help shore up capital at commercial banks, who've taken a beating from volatile equities markets. But the rally soon fizzled.
Australia announced 42 billion Australian dollars ($26 billion) in fresh spending in hopes of shielding the country's resources-based economy from the global downturn. Hours after the announcement, the country's central bank slashed the benchmark cash rate by a full percentage point, sending money market rates to their lowest in 45 years.
After helping lift markets across the region early on, news of the latest government intervention was overtaken by anxiety among many investors about sinking corporate profits and signs of economic weakness in Asia and beyond.
In the U.S. overnight, new figures showed personal spending and total construction spending eroded further last month in the world's largest economy, a vast market for Asian products. Uncertainty about the details of America's $819 billion stimulus proposal, still up for debate in the U.S. Senate, also sidelined investors.
"People are looking toward stimulus packages with cautious optimism, but I wouldn't say we're breaking the shackles that are holding us back," said Miles Remington, head of Asian sales trading at BNP Paribas Securities in Hong Kong. "I don't think the global economy has really changed on a fundamental basis."
As trading got under way in Europe, Britain's FTSE 100 was down 0.7 percent, Germany's DAX added 0.2 percent and France's CAC 40 gained 0.1 percent. Wall Street futures pointed to a weaker open for U.S. markets. Dow futures fell 39, or 0.5 percent, to 7,848 and S&P500 futures were off 1.6, or 0.2 percent, to 819.70.
In Asia, the Nikkei 225 stock average fell 48.47 points, or about 0.6 percent, to 7,825.51 after trading about 1 percent higher earlier in the session. Hong Kong's Hang Seng Index, also green earlier in the day, declined 0.7 percent 12,776.89.
Elsewhere, South Korea's Kospi added 1.4 percent at 1,163.20 points and Australia's key stock measure rose 0.3 percent. Markets in India, China, Singapore and Taiwan also advanced.
On Tuesday, the head of the International Monetary Fund said Asia's struggling economies will likely bounce back quickly once their trading partners begin to recover, predicting a turnaround could come by late this year or early 2010.
But for 2009, the outlook is still grim: the IMF's latest forecast for world economic growth is 0.5 percent, with advanced economies contracting by 2 percent.
"Those figures are the lowest rates we have experienced in the postwar period, so they really are rather gloomy," the IMF's managing director, Dominique Strauss-Kahn, said in a Web cast.
In Japan, financials initially soared on news of the Bank of Japan's stock purchase plan before selling down. Sumitomo Mitsui Financial Group Inc. edged up 0.6 percent, while Mizuho Financial Group Inc. closed flat. The country's largest bank, Mitsubishi UFJ Financial Group Inc., which reports earnings Friday, fell 0.8 percent
Tech companies were among the day's best performers, following similar gains in U.S. markets overnight. Samsung Electronics rose 4.5 percent in South Korea, Canon Inc. edged 3.6 percent higher in Tokyo and Taiwan's Hon Hai Precision advanced 2.2 percent.
In New York, selling in industrial, energy and financial stocks sent the Dow Jones industrial average down 64.03, or 0.80 percent, to 7,936.83.
Broader indicators were mixed, with the Standard & Poor's 500 index slipping 0.44 to 825.44, but the tech-heavy Nasdaq composite rising 18.01, or 1.2 percent, to 1,494.43.
Oil prices gained slightly in Asian trade, with light, sweet crude for March delivery rose 36 cents to $40.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.60 overnight to settle at $40.08.
In currencies, the dollar rose to 89.55 yen, up from 89.41 yen. The euro rose to $1.2820, compared to $1.2856.
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AP Writer Tomoko A. Hosaka in Tokyo and Business Writer Elaine Kurtenbach in Shanghai contributed to this report.
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