Market Summary - Friday, August 29, 2008

U.S. stocks fell on Friday after the previous session's sharp gains, as the price of oil rose as tropical storm Gustav was poised to enter the Gulf of Mexico, raising concerns about its impact on U.S. offshore oil and gas output, and a newspaper reported that Russia might tighten its supply. Economic data added to the market jitters heading into the long U.S. Labor Day weekend. The DOW at mid-day was: -160 to 11,558, the S&P 500 held at 1285, down 15 and NASDAQ remained in the 2364 range.

A government report before the opening bell showed U.S. personal income tumbled in July and spending slowed and an inflation measure hit a 17-year high.

The U.S. bond market was set to close early on Friday ahead of the Labor Day holiday, and Goldman noted that stock trading volume was likely to thin even further in the afternoon.

Business activity in the U.S. Midwest expanded in August as new orders rose, the Institute for Supply Management-Chicago business barometer showed, even as the rate of hiring plummeted to a four-month low.

The Reuters/University of Michigan report on consumer confidence showed confidence recovered somewhat from depressed levels helped by moderating gasoline prices.

The dollar slipped on Friday, shrugging off surprisingly strong U.S. growth figures from the previous day, as dealers opted to take profits from the currency's steepest monthly rise in over a decade, 5% percent.

European Central Bank Governing Council member Klaus Liebscher echoed comments from other policymakers earlier in the week that inflation is too high for more on the euro zone data.

Sterling has had an even steeper fall against the dollar in August than the euro, down over 8 percent, its biggest drop since it crashed out of the Exchange Rate Mechanism in 1992. The pound plumbed a new 12-year low on a trade-weighted basis on Friday on growing concern about the UK economy's weakness.

"The UK economic picture is deteriorating so rapidly, and the recent housing market data is confirming that. The market is rushing to revise down its growth forecast for the UK," said Ian Stannard, senior foreign exchange strategist at BNP Paribas.

The benchmark Nikkei 225 Stock Average rose 2.4 percent to 13,072.87, after U.S. economic data and a fall in oil prices lifted sentiment. Gains were broad-based, but steel and financial issues led the advance. The broader Topix index gained 2.9 percent to 1,254.71.

Seoul shares ended flat, with falls in Doosan Group-associated shares dragging on the index after a group unit announced financing plans, while financials and steelmakers rose after extended losses. The Korea Composite Stock Price Index closed up 0.01 percent at 1,474.24 points.

The Australian benchmark S&P/ASX 200 rose 1.4 percent to 5,135.6, led higher by financial stocks such as Macquarie Group Ltd., as concerns about the global economy eased following strong U.S. economic growth figures.

The benchmark Shanghai Composite Index closed up 2.01 pct at 2,397.37, led by property stocks amid speculation that the government will announce new measures to support the markets over the weekend.

The Shanghai A-share Index was up 2.00 percent at 2,516.78 and the Shenzhen A-share Index rose 2.63 percent to 690.44. The Shanghai B-share Index rose 3.98 percent to 151.76 and the Shenzhen B-share Index gained 2.51 percent to 384.42.

Taiwan's weighted index closed up 0.18 percent at 7,046.11, off early highs, as profit-taking placed a lid on gains driven by the overnight rally on Wall Street.

Hong Kong's Hang Seng index closed up 289.6 points or 1.38 pct at 21,261.89, off a low of 21,223,99 and high of 21,474.31.