ASIA MARKETS: Asian Markets Mostly Higher As North Korea Rhetoric Settles Down

By Kenan Machado Features Dow Jones Newswires

Hang Seng, Kospi bounce back after last week's losses, but Nikkei falls

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Stock markets across Asia were higher on Monday following last week's pullback, as senior U.S. officials over the weekend sought to play down risks of a military conflict with North Korea.

Hong Kong's Hang Seng Index was up 1.1% after registering its biggest one-week decline since December. Elsewhere, Australia's S&P/ASX 200 added 0.5% and Singapore's Straits Times Index rose 0.6%, with buying across sectors.

There has been a repricing to reflect the reduced possibility of war in the Korean Peninsula, said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. "Some of the rhetoric has scaled back."

Late Sunday, U.S. Secretary of Defense Jim Mattis and Secretary of State Rex Tillerson wrote that the Trump administration was continuing to seek diplomatic solutions to seek the "irreversible denuclearization" of North Korea.

"The U.S. has no interest in regime change or accelerated reunification of Korea," the two wrote in a commentary published in The Wall Street Journal. The U.S. also has no desire to station troops north of the Demilitarized Zone, they added.

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Those words followed comments on Sunday by Gen. Joe Dunford, chairman of the Joint Chiefs of Staff, that the U.S. military would support Tillerson's effort to use diplomatic and economic pressure on North Korea to avoid war.

In South Korea, the Kospi rebounded about 0.5%, after correcting 3.2% last week, the largest one-week percentage decline since June last year. Samsung Electronics (005930.SE) rose 0.9% and Korean Air (003490.SE) added 0.3%.

Japan's Nikkei Stock Average , meanwhile, was the key underperformer in the region. It was closed Friday for a holiday. The index fell as much as 1.2% in early trading as the yen strengthened, which hurts the competitiveness of the country's exports.

The index pared losses, falling 0.9%, with data showing Japan's economy grew more quickly than expected in the April-June quarter.

Strong household spending drove the sixth straight quarter of growth under Prime Minister Shinzo Abe.

However, keeping the growth streak going at the current pace will likely be difficult. "The economy will likely remain solid but slow down in the third quarter since the domestic demand strength can't last at this level," said JPMorgan economist Hiroshi Ugai.

The dollar recovered slightly against the yen in Monday morning trade, buying Yen109.40 after dropping to a low of Yen108.75 on Friday when Japanese markets were closed.

Weak inflation readings in the U.S. and the lower probability of the Fed to raise rates would also embolden riskier investments, said Varathan.

(END) Dow Jones Newswires

August 13, 2017 23:21 ET (03:21 GMT)