8:30AM New York, 8:30 PM Hong Kong – Asian markets corrected sharply on weakness in European and New York markets.

Asian markets rebounded after a volatile day of trading. Shanghai led the region with a gain of 1.5% followed by 1.2% advance in Korea, 1.0% rise in India and Australia, 0.65% addition in Singapore, and 0.45% increase in Hong Kong.

In Hong Kong trading stocks fell sharply at the opening but regained in the afternoon. Daily turnover on the main board dropped to HK$63.1 billion from HK$ 65.2 billion and volume on GEM market was reported at HK$0.7 billion, a decline of 20% from the previous session. Hang Seng Index at mid-day trading fell in the negative zone but attempted several rebounds in the afternoon trading and closed higher. Banks led the decliners. HSBC dropped 2% and Bank of East Asia fell 3%.

July consumer price index, a measure of inflation, jumped 5.6% on a sharp increase in food prices of 15.4% and meat price surge of as much as 45%. The inflation in June gained 4.4%. Expenses for food form 33% of basket of consumer spending. The rising food and energy prices have fueled the inflationary pressure and kept the inflation level above the target level for the last three of the six months. Inflation has been hovering around 3.5% for the first six months of the year and is likely to jump higher in the coming months. Inflation in non-food items jumped to 0.9%, lower than 1% in prior three months.

China reported July trade surplus of $24.4 billion, 67% jump from a year ago, and declined from $26.9 billion from June. The elevated surplus is fueling sharp rise in bank deposits, real estate prices, and stock market valuations. The rising demand is also fueling inflation in energy and food prices above the target set by the central bank. The People’s Bank of China said that the broadest measure of money supply, M2, rose 18% in July. Outstanding local currency loans in the month surged 16.6% and deposits in the local currency increased 16%. The foreign direct investment in the first seven months jumped 13% to $37 billion and keeping the economic growth rate at 12%.

Shanghai Composite Index led the region with a rise of 1.5% to close at 4,820.06, record high.

In Sydney trading ASX 200 gained 75.60 or 1.3% to 6,011.60. Of the total 201 stocks in the index, 136 gained, 55 declined, and 10 remained unchanged. Banks led the rising stocks after the Reserve Bank of Australia added liquidity in the system for the third day.

St. George Bank led the banking sector with a rise of 4% followed by Commonwealth 2.6% in National Bank of Australia, and 2.3% rise in Commonwealth Bank of Australia.

Leighton Holdings led the index stocks with a rise of 7.30% followed by 6.8% gain in Flight Centre, and 6% increase in Bradken, Crane Group, and SIMS Group. Perilya Ltd added 5.4% after falling 13.6% Energy Developers led the decliners in the index stocks with a fall of 9% followed by 5% loss in Queensland Gas, Arrow Energy, and 3% decline in Adelaide Bank and Sunland Group.

Crane Group Ltd. increased 6% after reporting annual income before one time charges rose 14.5% on 7% increase in sales to A$2.2 billion.

Qantas Airways said that it will set aside $40 million to cover charges from air freight price fixing.

For the third day in a row, the Reserve Bank of Australia added liquidity in the market to stem the rising interest rates and worries that credit crunch may stem economic growth. The bank added close $1.25 billion, lower than the money injected in the previous two trading days. The global injection of liquidity in local markets was carried out by the Federal Reserve Bank in Washington, the European Central Bank in Europe, and Central Bank in Japan.

In its quarterly policy, the bank also raised it inflation forecast to 3%, near the top of its range, and said that the inflation is likely to stay there during the next year. The bank also said that the economic growth is likely to increase to 4.5% at the end of the June of next year. The bank raised its target for cash rate to 6.5% last week, and forecasted today that the inflation will accelerate to 2.5% by the end of 2007 and will increase further to 3% in the year 2008.


8:00AM Akzo Nobel agreed to acquire ICI for $16.2 billion.

Akzo Nobel (AKZOY: chart), Dutch chemicals group, announced on Monday an agreement to acquire U.K. rival Imperial Chemical Industries in a cash deal worth 8 billion pounds ($16.2 billion) , or 670 pence a share. The transaction represents a 22% premium on the share price before the U.K. group announced it had received an approach in June. Akzo Nobel said that in addition to the bid price, ICI shareholders will also receive a second interim dividend of 5 pence a share.

Akzo''s previous offers of 7.2 billion pounds and then 7.8 billion pounds had been rejected by ICI. The acquisition of the maker of Dulux paints is expected to boost its coatings industry, enabling it to increase its global market share, as well as its presence in emerging markets, where ICI makes roughly a third of its sales.


7:00AM New York, 8:00PM Tokyo – Market indexes in Tokyo rebounded as investors shrugged off U.S. mortgage market problems. Commodities, real estate, and financials led the rebound.

Nikkei 225 index plunged 35.96 or 0.2% to 16,800.95 at close with financial and brokerage stocks leading the decliners. Topix index dropped 1.29 to 0.1% close at 1,632.64.