Asian markets rise, yen weaker on Abe comments

HONG KONG - Asian markets rose in quiet pre-Christmas trade on Monday after big losses in the previous session as US lawmakers remain deadlocked in talks to avert the fiscal cliff.

The yen dipped against the euro and the dollar after Japan's incoming prime minister again called on the central bank to take further steps to ease monetary policy, warning he would change the law to make sure it followed his instructions.

With many markets open for just a half day Hong Kong closed 0.16 per cent higher, adding 34.89 points to 22,541.18, Sydney added 0.25 per cent, or 11.6 points to 4,635.2 and Seoul was flat, edging up 1.40 points to 1,981.82.

Shanghai was 0.27 per cent higher, adding 5.74 points to 2,159.05.

Tokyo, Manila and Jakarta were closed for public holidays.

Regional gains came despite losses on Wall Street Friday as Capitol Hill broke up for Christmas without an agreement to avoid the huge tax hikes and spending cuts due to take effect in just over a week.

If the $600 billion package comes into effect and a less painful budget to cut the nation's deficit is not agreed, economists say it will tip the United States into recession, which would have a knock-on effect for the world economy.

Investors were hit after House Speaker John Boehner late Thursday scrapped a vote on a bill that would have extended tax cuts for all Americans earning less than $1 million even if a wider deal could not be struck.

The move, which he described as his "Plan B", was dropped because he did not have enough support. He said his party would recess until after Christmas.

"The breakdown of what little progress there was in the US has hit markets hard... especially since Speaker John Boehner appears to have lost the support of part of his Republican party," said Chris Beauchamp, market analyst at IG Markets in Britain.

"While we haven't seen similar volatility to that experienced during the debt ceiling crisis (in August 2011) yet, the New Year could get messy if we cross that particular Rubicon" he told Dow Jones Newswires.

"Perhaps the only thing we can hope for is that (Federal Reserve) chairman Ben Bernanke will step into the breach to calm markets with some easing magic if 1 January comes and goes without a resolution," Beauchamp added.

On Wall Street the Dow lost 0.91 per cent, the S&P 500 fell 0.94 per cent and the Nasdaq dipped 0.96 per cent.

However, the dollar improved on Monday against the yen after Shinzo Abe stepped up pressure on the Bank of Japan Sunday to set a two-per cent inflation target.

The prime minister-elect told Fuji Television the bank's policy board must back his proposed two per cent inflation goal in January and warned failure to do so would mean he would amend the law that sets out its duties and guarantees its independence.

The Japanese unit has already come under pressure as Abe, whose conservative Liberal Democratic Party won a landslide election earlier this month, has said he will push the BoJ to carry out more aggressive easing measures.

In Asian trade the euro bought 111.34 yen, compared with 110.05 yen late Friday in New York, while it was also at $1.3197 from $1.3181.

The dollar fetched 84.37 yen, up from 84.25 yen.

Oil prices were lower. New York's main contract, light sweet crude for delivery in February shed 14 cents to $88.53 in the afternoon and Brent North Sea crude for February fell 37 cents to $108.65.

Gold was at $1,662.60 at 1050 GMT compared with $1,648.01 late Friday.

In other markets:

Singapore was up 0.16 per cent, or 5.01 points, at 3,168.57.

Wilmar International gained 0.62 per cent to Sg$3.25 while Keppel Corp. shed 0.28 per cent to Sg$10.84.

Wellington, which was open for just half a day, closed flat, edging up 3.08 points to 4,057.82.

Taipei ended flat, edging down 4.62 points to 7,535.52.

Taiwan Semiconductor Manufacturing Co. was 0.52 per cent lower at Tw$95.2 while leading smartphone maker HTC fell 1.07 per cent at Tw$277.0.

Kuala Lumpur rose 0.64 per cent, or 10.55 points, to close at 1,669.40.

CIMB gained 0.1 per cent to 7.64 ringgit, Malayan Banking added 0.3 per cent to 9.07 while Bumi Armada dipped 0.3 per cent to 3.80.

Bangkok added 0.18 per cent or 2.44 points to 1,375.82.

Oil company PTT lost 0.60 per cent to 331 baht, while telecoms company Advanced Info Service gained 2.96 per cent to 209 baht.

Mumbai edged up 0.07 per cent, or 13.09 points, to 19,255.09.

Ailing carrier Kingfisher Airlines rose 5.0 per cent to 15.97 rupees and Tata Motors rose 2.44 per cent to 306.7 rupees.