Asian shares still volatile

Asia Pacific markets continued to track lower with poor overnight leads difficult to brush off. MSCI’s Asia Pacific Index was little changed after dropping 2.4% in the last three trading days. Hong Kong’s Hang Seng Index fell 0.7%, South Korea’s Kospi index slid 0.7%, Taiwan’s Taiex Index lost 0.1% and the Shanghai Composite Index gained 0.1%. Financial markets were closed yesterday for holidays in the four places.

Japan’s Nikkei 225 Stock Average climbed 0.7%, led by utilities, after Chief Cabinet Secretary Yukio Edano said a liquidation of Tokyo Electric Power must be avoided. Shares of the operator of the damaged Fukushima nuclear plant rose 2.9%, rebounding from a 28% plunge yesterday. Political bickering over the future of Prime Minister Naoto Kan has cast doubt over whether his administration can implement its plan to ensure that Tokyo Electric compensates victims of a disaster at its atomic plant.

In corporate news, China Shenhua Energy and Yanzhou Coal Mining extended last week’s decline in Hong Kong trading on speculation that government measures to control prices of the resource will erode earnings. Shares of Shenhua dropped as much as 5.7% and were at HK$34.35 as of 10.39am local time, down 4.1%. That followed a 6.4% decline on June 3. Yanzhou fell as much as 4.8%. The Hang Seng Index retreated 0.7%.

The cost of insuring the bonds of Qantas Airways has climbed to the most since September as Australia’s biggest carrier cuts staff to cope with rising fuel costs and weaker demand for travel after natural disasters. Credit-default swaps on Qantas jumped 16.5-basis-points this quarter to 162.5-basis-points as of 11.52am in Sydney, according to Deutsche Bank AG prices.

In currencies, the Australian dollar slid 0.2% to $1.0687, after earlier climbing as much as 0.4%. It reached $1.0775 on June 3, the strongest since May 11. The Reserve Bank of Australia left its benchmark interest rate unchanged today. Governor Glenn Stevens said the decision reflects softened prices for raw materials and an unemployment rate that’s been little changed near 5%. Consumer prices that were boosted by natural disasters earlier this year aren’t expected to accelerate much above the RBA’s target range of 2% to 3%, he said.

Staying in Australia, tax barriers on Shariah-compliant products are expected to be removed this month, paving the way for the country’s first sale of Islamic bonds. The national taxation board had consultations with law firms and business groups in November and will present its report to the assistant treasurer in June, according to the website. Australian lenders are stepping up efforts to tap the $1 trillion Islamic finance industry as the country seeks to join Thailand, the UK and Singapore in amending legislation to attract funds from the Persian Gulf.