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Caution Kicks In, Asian Markets End Mixed - 2003-03-21


Caution kicked in among investors in Asia Friday, after a rally at the start of U.S. military action against Iraq. Asian markets ended mixed, as investors began re-assessing the economic impact of the war.

Investors in Asia retreated to the sidelines Friday, after heavy buying at the start of U.S.-led attacks against Iraq. Traders say investors are concerned about the economic impact of a prolonged war, after Washington indicated that the military campaign could take some time.

Manila's four-day stock market rally ended Friday with the composite index down half-a-percent, at 1,032. Taiwan's weighted index fell more than a quarter-of-a-percent to 4,586.

The Australian and Hong Kong markets closed flat. The ASX-500 settled at 2,866, while Hong Kong's Hang Seng ended at 9,179.

On top of investor worries is how oil will trade in the short term. In Singapore Friday, crude oil rose from a three-month low, after news that some Iraqi oil wells have been set on fire.

Michael Kurtz, an analyst at U.S. investment bank Bear Stearns in Hong Kong, said "the duration of this conflict is critical. Behind the issue of duration really is how successful the U-S and the coalition are able to secure the oil fields, and that directly bears on whether the price of oil comes down to mid-20s or low-20s as most analysts are looking for."

Some oil-sensitive stocks, such as airline and shipping companies fell Friday. Taiwan's Evergreen Marine lost more than one-percent and its sister airline company, EVA, was down 2.4 percent. Many Asian airlines have already reduced or canceled flights to the Middle East.

Korean stocks bucked the trend, rising nearly 1.25 percent due to foreign buying. The KOSPI closed at a two-week high of 575.77.

Japan's stock market was closed Friday for a national holiday. The Nikkei 225 ended Thursday, up 1.8 percent at 8,195.

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