Tokyo stocks close down 0.98%

TOKYO stocks have closed down 0.98 per cent after the Bank of Japan (BoJ) announced fresh easing measures while chopping its growth outlook for Japan's economy.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange on Tuesday fell 87.36 points to close at 8,841.98, its lowest finish in about two weeks, while the broader Topix index of all first-section shares lost 0.92 per cent, or 6.84 points, to 733.46.

Following its meeting earlier on Tuesday, Japan's central bank announced Y11 trillion ($A134.14 billion) in additional monetary easing as a string of new data underscore slowing in the world's third-largest economy.

The BoJ said it would expand an asset-purchase program - its main policy tool - to Y91 trillion while keeping rates unchanged at zero to 0.1 per cent.

It follows a similar announcement last month.

The central bank also slashed its growth forecast in the fiscal year to March, saying the nation's economy would expand just 1.5 per cent, well off an earlier 2.2 per cent forecast, underlining the effect of the global slowdown and strong yen, which hurts exporters.

On currency markets, the dollar fell to Y79.50 after the BoJ announcement from Y79.90 before. Easing would tend to weaken the Japanese currency but analysts said the measures had largely been priced in.

"Any way you slice it, 10 trillion yen worth of buying in September, and now 11 trillion this month adds up to a great deal of easing," said CLSA equity strategist Nicholas Smith.

The BoJ move came as official data on Tuesday showed factory output came in weaker than expected for September, declining 4.1 per cent on-month, while Japan recently posted its worst September trade figures in more than 30 years, as a territorial dispute with China hit exports.

In Tokyo trade, shares in Sharp Corp jumped 6.17 per cent to Y172 on a report that the embattled Japanese electronics maker is in talks with US tech giants Apple, Google and Microsoft on forming business and capital tie-ups.

Nomura Holdings rose 1.41 per cent to Y287 after Japan's top brokerage said on Monday it eked out a $US35 million ($A34.03 million) net profit in the July-September quarter.

Honda Motor fell 2.75 per cent to Y2,333 after diving 4.65 per cent on Monday as the Accord and Civic maker cut its full-year profit outlook.

Troubled chipmaker Renesas Electronics was down 2.64 per cent at Y295 after posting a $1.18 billion loss in its fiscal second quarter.

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Bank of Japan lays out further stimulus

JAPAN'S central bank has expanded a government bond-buying program, acting to spur growth following news of a further decline in industrial production.

The Bank of Japan's policy board voted unanimously on Tuesday to increase the asset purchasing program by Y11 trillion ($A134.14 billion) to Y91 trillion.

The central bank decided against any change in its key interest rate, which remains at 0 per cent to 0.1 per cent.

The bond-buying program is intended to encourage borrowing and spending and help make Japan's exports more competitive.

A fresh barrage of negative data on Japan's failing recovery pumped up pressure for the central bank to act to help revive the world's third-largest economy.

Japan's industrial output contracted by 4.1 per cent in September from August and 8.1 per cent from a year earlier as automakers and steel mills cut production due to shrinking demand and antagonisms with China, according to the Ministry of Economy, Trade and Industry.

The economic recovery that followed Japan's March 2011 disasters has been doused by slowing global growth. Flaring tensions with China over disputed islands in the East China Sea have further crimped demand, especially for big-ticket items like cars. Slowing growth in China, meanwhile, has hit demand for industrial inputs like steel and machinery.

"Industrial production is on a downward trend," the ministry said, forecasting a further decline in October, followed by a rebound in November.

Embattled Prime Minister Yoshihiko Noda convened an extraordinary session of the legislature on Monday, appealing to the opposition Liberal Democratic Party to cooperate in passing a bill authorising bond sales to finance the growing deficit.

Japan's Cabinet approved a Y423 billion ($A5.16 billion) emergency stimulus package on Friday, double the size originally expected. The government was obliged to dip into reserves to pay for the new stimulus, since its leeway to boost spending is limited by a legislative standoff preventing issuance of some $US38.3 trillion ($A37.24 trillion) in deficit financing.

As it confronts that "fiscal cliff," which could raise the country's borrowing costs, Japan already leads industrial nations with government debt amounting to more than twice the country's gross domestic product.

"We still have work to do," Noda said on Monday in a speech that repeatedly reminded MPs of their responsibility toward future generations. He warned that funding shortfalls threaten to affect crucial government services.

Noda's Democratic Party of Japan is struggling as the Liberal Democrats gain in power. He was obliged to present his policy speech Monday in the House of Representatives after the LDP, which controls the upper house of the parliament, blocked him from delivering the speech in that chamber.

Apart from the political mess, exports, usually a bright spot for Japan's economy, are faltering as the prolonged crisis in Europe crimps demand. Another problem is the persistent strength of the yen, which makes products made in Japan relatively more expensive in overseas markets.

Shipments of passenger cars dropped 12.6 per cent in September from August and 13.2 per cent from a year earlier, METI reported. Shipments of virtually all other products also fell.

Jobless rate figures for September likewise offered little encouragement, as the government reported the seasonally adjusted unemployment rate was 4.2 per cent in September, unchanged from August.

The ratio of job offers to seekers fell to 0.81 from 0.83 in August, meaning there were 81 jobs for every 100 job seekers.

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Aust a better investment destination: RBA

AUSTRALIA is better equipped to deal with the effects of overseas economic problems, thanks partly to its attractiveness as an investment destination, a senior central bank official says.

Reserve Bank of Australia (RBA) deputy governor Philip Lowe also told the Commonwealth Bank's Australasian Fixed Income Conference in Sydney that the high Australian dollar had helped the country navigate though a once-a-century-investment-boom.

He said that the Australian economy had recorded solid growth, the unemployment rate remained relatively low, inflation was consistent with the target, public debt was low and the banking system sound.

"Few countries can make such claims."

He said the fact that the RBA's interest rate was above those of the other industrialised countries was helpful, especially to investment.

"The main reason for this is that the rate of return on new investment in Australia is higher than in many other countries, as evidenced by the high level of investment," he said.

"The very low interest rates in many other economies should not be seen as a good thing or something to aspire to.

"They reflect those countries difficult economic circumstances, and particularly the low risk-adjusted returns available on new investment."

Dr Lowe said this has meant that while many of the advanced economies struggled to attract investment, Australia has had the highest level of investment, relative to economic growth, in over a century, and a further increase was expected.

The RBA cash rate, of 3.25 per cent, is much higher than those of the US, Europe, the UK and Japan, all of which are below one per cent with most close to zero per cent.

The central banks of these countries cannot cut their interest rates any lower to stimulate growth and therefore buy bonds and mortgage-backed securities to free up commercial bank funds and encourage lending, a policy called quantitative easing.

Dr Lowe said this had worked, helping increase market confidence but has also driven down the yields on government bonds, which has decreased the cost of borrowing for debt-laden nations.

It had also increased investment flows into bonds markets for a higher return, that, of course, included the Australian bond market, that could boast yields of over three per cent.

"When institutions look for alternatives to holding large deposits earning a near-zero return, they look not just at domestic assets but at foreign assets as well," Dr Lowe said.

"Not surprisingly, with the rest of the world doing better than the troubled advanced economies, many of the assets earning positive risk-adjusted returns are located outside the countries undertaking quantitative easing."

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Hong Kong shares end down 0.38%

HONG Kong shares have fallen 0.38 per cent, a third straight drop, with developers and Chinese banks the main losers as the index continued to correct after a 10-day winning streak.

The benchmark Hang Seng Index on Tuesday eased 82.47 points to 21,428.58 on turnover of $HK46.08 billion ($A5.79 billion).

"The market may take a breather in November and then resume the uptrend in December for a traditional year-end rally," Ben Kwong, chief operating officer at KGI Asia, told Dow Jones Newswires.

China banks were hurt after China Citic Bank reported its third-quarter net profit fell 15 per cent year-on-year.

ICBC fell 1.8 per cent to $HK5.03, China Construction Bank slipped 1.4 per cent to $HK5.71 and Bank of China closed down 1.6 per cent at $HK3.12.

Hong Kong property firms fell for a second straight session, with New World Development off 2.8 per cent at $HK11.74 on top of its 6.4 per cent fall on Monday in reaction to government measures to curb soaring prices.

Fosun Pharmaceutical fell 8.1 per cent to $HK10.84 on its debut.

However, developers were the main gainers in Shanghai as Chinese shares closed up 0.17 per cent. The benchmark Shanghai Composite Index rose 3.41 points to 2,062.35 on turnover of 42.8 billion yuan ($A6.71 billion).

"Major developers' satisfactory sales performance this year and accelerated land purchases should provide good support to their share price performance," CIMB Securities analyst Johnson Hu told Dow Jones Newswires.

Poly Real Estate gained 2.52 per cent to 10.98 yuan and Gemdale climbed 2.20 per cent to 5.11 yuan after both companies reported year-on-year rises in net profit for the third quarter.

Liquor-makers also rose, with Xinjiang Yilite Industry surging by its 10 per cent daily limit to 13.09 yuan after it announced a profits rise. Kweichou Moutai added 1.14 per cent to 244.58 yuan.

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UK flights cancelled ahead of US hurricane

DOZENS of British flights to and from the east coast of America have been cancelled because of the threat of Hurricane Sandy.

British Airways (BA) has grounded all flights to and from the US eastern seaboard, including New York, Baltimore, Washington, Boston and Philadelphia.

A number of BA flights from the US to London have also been halted.

Virgin Atlantic has cancelled flights to and from New York, Washington and Boston.

A statement on BA's website said: "We understand that customers may be disappointed, however their safety is our highest priority. We are offering the option to rebook or receive a refund to those customers whose flights are cancelled.

"We have also received reports that public transport links to East Coast US airports may be disrupted so advise customers to review their flight and local travel plans before leaving for the airport."

A spokesman for Virgin Atlantic said last night: "Passenger and crew safety is our number one priority and we are continuously liaising with local authorities to assess the situation and minimise the disruption caused to passengers.

"We advise all passengers to check our website: www.virginatlantic.com for the latest updates and advice."

Heathrow Airport is advising passengers who are due to fly to the US on Monday to check the status of their flight with their airline before travelling.

Hurricane Sandy is threatening 50 million people on America's heavily-populated East Coast today and forecasters warned that New York could bear the brunt of the one-of-a-kind superstorm.

Forecasters warned the megastorm could wreak havoc over 1287 kilometres from the East Coast to the Great Lakes.

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Tokyo stocks flat at close

TOKYO stocks have closed flat as dealers took a wait-and-see position ahead of a Bank of Japan policy meeting, while carmakers fell after Honda slashed its full-year profit forecast.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange on Monday slipped 0.04 per cent, or 3.72 points, to 8,929.34 while the broader Topix index of all first-section issues was down 0.13 per cent, or 0.93 points, to 740.30.

Stocks gave up early gains and started the afternoon session lower, pushed down by the midday release of Honda Motor's earnings report.

Honda shares dived 4.65 per cent to close at Y2,399 after it said its full-year results would be much weaker than forecast even as its first-half profit more than doubled to $US2.7 billion ($A2.62 billion).

"Honda's sales apparently felt the impact from a weaker China market, as well as the stronger yen, and raised the possibility that it will revise down its full-year view yet again," said Hideyuki Ishiguro, strategist at Okasan Securities.

"Of course Honda's problems are not unique. The magnitude of the China impact may be most felt in Nissan's earnings, since it has the heaviest proportional exposure to China," he told Dow Jones Newswires.

The release of the figures had been set for after markets closed, but came out several hours earlier with the company blaming a "human error".

Nissan Motor fell 2.18 per cent to Y670, while Toyota Motor lost 1.62 per cent to Y3,030.

Japan's central bank is widely expected to take further easing steps at a policy meeting on Tuesday as it looks to counter a slowdown in the world's third-largest economy and tackle the deflation that has plagued it for years.

With interest rates hovering near zero, the bank's main policy tool is an Y80 trillion ($A975.02 billion) asset-purchase program.

"The markets have pretty much factored in an additional 10 trillion yen in asset purchases by the central bank," said Tatsunori Kawai, chief strategist at kabu.com Securities.

NEC rose 5.71 per cent to Y148 after the information technology giant announced on Friday it booked a $US100 million profit in its fiscal first half thanks to a boost in sales and cost-cutting.

Japan's biggest mobile carrier NTT DoCoMo tumbled 5.99 per cent to Y116,000 after it cut its full-year profit forecast owing to rising costs.

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Woodside signs deal with Japan Bank

WOODSIDE Petroleum has signed a preliminary agreement with the Japan Bank for International Cooperation (JBIC) to help finance future liquefied natural gas (LNG) projects.

The oil and gas producer said the memorandum of understanding (MOU) aimed to support Japan's requirement for stable and long-term energy supplies.

Woodside said the MOU strengthened the long-term relationship established between the two organisations through the financial support that the Japanese bank provided for the Pluto LNG project.

"Under the agreement Woodside and JBIC will hold periodic discussions relating to Woodside's future LNG developments and JBIC will consider providing financial support for those potential developments as well as creating opportunities for Japanese companies to participate in Woodside's future LNG developments," the company said.

The agreement comes after Woodside last week struck an agreement with Daewoo International Corporation for a production sharing contract in Burma, the first time the oil and gas producer will operate in deep water off Burma.

In May Woodside Petroleum signed a $US2 billion ($A1.92 billion) deal to sell part of its stake in the Browse gas project to Japan's Mitsubishi Corporation and Mitsui & Co.

The Japanese companies will buy a 14.7 per cent stake in the $30 billion LNG project through their Perth-based joint venture company, Japan Australia LNG (MIMI).

MIMI helped obtain finance from Japanese banks, including JBIC.

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Hong Kong shares slip 0.16%

HONG Kong shares have lost 0.16 per cent as developers were hit after the city's government outlined plans to curb soaring property prices.

The benchmark Hang Seng Index on Monday fell 34.52 points to 21,511.05 on turnover of HK$47.07 billion ($A5.89 billion).

The losses are the second in a row after the index enjoyed a 10-day winning streak up until Friday, thanks to huge foreign capital inflows after the US Federal Reserve launched its third bond-buying scheme last month.

The Hong Kong government unveiled on Friday fresh measures to keep a lid on property demand, including a 15 per cent tax on purchases made by foreigners.

Sun Hung Kai Properties, the city's largest developer by market capitalisation, slumped 5.1 per cent to $HK106.10, while Cheung Kong fell 4.7 per cent to $HK112.30 and Henderson Land, New World Development and Sino Land each took a 6.4 per cent hammering.

However, the losses were tempered by Sinopec, which jumped 2.9 per cent to $HK8.25 despite reporting its third-quarter net profit fell 9.4 per cent year-on-year.

And China Construction Bank rose 0.9% to $HK5.79 after third-quarter earnings came in 12 per cent higher.

Chinese shares closed down 0.35 per cent. The benchmark Shanghai Composite Index fell 7.27 points to 2,058.94 on turnover of 39.1 billion yuan ($A6.11 billion).

"The third-quarter macroeconomic data has shown some signs of the economy bottoming out, but recent corporate earnings show that demand has yet to recover," Nanjing Securities analyst Zhou Xu told Dow Jones Newswires.

Lower prices hit rare earths producers. Baotou Steel Rare-Earth slumped 5.43 per cent to 27.35 yuan while Xiamen Tungsten lost 3.77 per cent to 33.67 yuan.

China Pacific Insurance dropped 3.23 per cent to 18.25 yuan after it posted a nearly 60 per cent year-on-year decline in third-quarter net profit.

Other insurance firms fell ahead of the release of their corporate earnings, with Ping An Insurance losing 4.23 per cent to 38.06 yuan and New China Life Insurance shedding 1.63 per cent to 21.73 yuan.

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Apartment blocks evacuated in east Sydney

ABOUT 60 people have been evacuated from two apartment blocks in Sydney's east after a fire broke out at an electrical substation.

The apartment blocks in Maroubra have been evacuated as a precaution after the adjoining substation caught fire.

The fire is not spreading, but the 15 firefighters at the scene can't enter the substation until energy authorities kill power, an emergency services spokesman told AAP.

"We're not going to send anyone in because all sorts of nasty things can happen at a substation," he said.

There's no indication of what caused the blaze at this stage, but it's not belive to be deliberate.

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14 Sri Lankan asylum seekers sent home

A MAN making his second bid for asylum was among 14 asylum seekers sent home after allegedly hijacking a ship off the coast of Sri Lanka, the federal government says.

Speaking in Sydney, Immigration Minister Chris Bowen said the 14 asylum seekers left Cocos Islands on a plane bound for Sri Lanka at 1pm (AEDT) on Saturday.

He said the group, which also included three children, had all been on the Chejan - a fishing trawler that was allegedly hijacked on October 13 off the Sri Lankan coast.

The boat had been missing until it was intercepted on Thursday north-west of the Cocos Islands by ACV Hervey Bay.

He said the government had decided to remove all but one of the alleged 15 hijackers because they faced "serious charges in Sri Lanka".

"The government took the view that it's appropriate that they face those charges and the removal occur as soon as possible," Mr Bowen told reporters.

"The Australian government took the view that the Sri Lankan government should be able to cooperate and these people should be able to face these charges."

He said the government was not pressured by Sri Lanka to remove the group and did not say why one of the alleged hijackers had not been expelled.

He also denied the government had acted overly secretively on the issue.

"I don't think there's been secrecy, we've been progressing their removal and that entails conversations with other governments and it entails steps being put in place," he said.

The group included one man who had already been removed from Australia after a previously failed asylum bid, Mr Bowen said.

"I'm very clearly now, we are showing that if they return again we have steps available to us which we will implement," he said.

Opposition immigration spokesman Scott Morrison said the Chejan should never have reached Australian waters.

"Labor has gambled on our borders by allowing alleged pirates to enter our waters and be given the opportunity to make a protection claim," he said in a statement.

Meanwhile, the Department of Immigration and Citizenship confirmed on Saturday that seven more Sri Lankan men had returned home voluntarily from Christmas Island.

They departed Perth on Friday on a commercial flight for Colombo.

Mr Bowen said he expected even more people return home in the future as the government's policy of offshore processing takes effect.

People who opt to depart voluntarily can receive individual reintegration support to assist with their return through the International Organisation for Migration.

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