Asia gains for fifth year

GLOBAL MARKETS/ STOCK REPORT

Asian stocks rose, helping a key index cap its fifth year of gains, amid speculation the US Federal Reserve will cut rates next year to boost growth in the world's largest economy.

Sun Hung Kai Properties led Hong Kong developers higher as some investors bet the city's borrowing costs will decline.

"Further rate cuts can be expected as the Fed stimulates the economy," said George Hsieh, who manages $600 million at Capital Securities Investment Trust in Taipei. "Asian exporters can benefit from sustainable demand if the Fed has its way."

The MSCI Asia Pacific Index rose 0.9 per cent to 158 as of 5:42 pm in Hong Kong, taking its climb this year to 12 per cent.

Hong Kong's Hang Seng Index added 1.6 per cent, the most among Asian markets open for trading today. Japan, China, South Korea, the Philippines, Indonesia, Vietnam and Thailand were shut.

Pakistani stocks slumped after the assassination of former Prime Minister Benazir Bhutto caused rioting in the country during the weekend. Newcrest Mining led gold producers higher as the price of the metal traded at the highest in almost 28 years.

Concern the US economy may fall into recession amid mounting financial company losses related to investments in sub-prime mortgages have curbed gains in Asian equities this year. The MSCI benchmark's 2007 growth is set to be the slowest since a 9.8 per cent drop in 2002.

EUROPE
European stocks fell in the year's last day of trading, leaving the Dow Jones Stoxx 600 Index on track for its first annual decline since 2002.

Publicis Groupe, the owner of the Leo Burnett advertising agency, led the drop after Citigroup Inc. advised investors to sell media stocks.

Mining companies Rio Tinto Group and Xstrata slumped with copper prices. Game Group, the UK's largest video-game retailer, rallied after saying profit will beat analyst estimates.

The Stoxx 600 decreased 0.1 per cent to 364.20 at 9:17 am in London, extending its 2007 loss to 0.3 per cent. The UK's FTSE 100 Index and France's CAC 40 fell 0.3 per cent today. Trading may be slower than usual with markets including Germany, Italy, Spain and Switzerland shut.

"It looks like the market is tired and looking forward to the new year," said Andrew Popper, chief investment officer at SG Hambros Bank in London, which oversees $14 billion.

Exchanges in the UK, Ireland, the Netherlands, Belgium, Luxembourg, France and Greece will close early, while all markets in the region will be shut tomorrow for the New Year's holiday.

The Stoxx 600 has retreated this year on concern the worst US housing slump in 16 years and turmoil in credit markets will drag down the global economy. A gauge of banks has slid 17 per cent for the worst performance among 18 industry groups in Europe.

Benchmarks fell in five of the eight markets open for trading today. For the full year, Germany's DAX Index led gains among the region's 18 national measures with a 22 per cent advance. Ireland's ISEQ Overall Index was the worst performer, dropping 26 per cent.