Asian stocks closed mixed on Wednesday, as investors took a breather after recent strong gains. While better-than-expected corporate results and economic indicators encouraged investors do some stock-specific buying, underlying mood remained cautious ahead of the release of U.S. bank stress test results. Reports that Bank of America will need an additional $35 billion in new capital, also kept investor sentiment subdued. The Japanese market was closed for a public holiday.

Crude oil price dropped to $53.84 a barrel in New York trading on Tuesday after hitting a five-month high as bulging oil inventories and slumping energy demand outweighed fragile hopes for an early economic recovery. However, in Asian trading on Wednesday, crude oil price crept above $54 a barrel following encouraging economic data and upbeat comments from the top U.S. central banker. U.S. crude supplies fell 1 million barrels to 373.8 million barrels last week, the American Petroleum Institute said in a report released after trading hours on Tuesday.

Overnight, the U.S. markets saw some hectic profit taking after the splendid rally stocks had staged in the previous session. However, the major averages ended the session well off their worst levels of the day following upbeat remarks from the U.S. Federal Reserve Chairman Ben Bernanke. The Dow Jones Industrial Average slipped 0.19%, the Nasdaq Composite edged down 0.54% and the S&P 500 index moved down 0.38%.

Earlier in the day, the Fed Chairman testified before the Joint Economic Committee of Congress, noting that recent data has suggested that the pace of contraction in the U.S. economy may be slowing. The beleaguered housing market may be bottoming, but unemployment will continue to rise, as businesses remain cautious about hiring, he said.

Looking forward, Bernanke expects inventory liquidation to slow over the next few quarters. The economic activity is also expected to bottom out before turning up later this year. Nonetheless, he noted that the rate of growth of real economic activity is likely to remain below its longer-run potential for a while.

According to a release from the Institute for Supply Management, ISM's index of activity in the service sector rose to a seven-month high of 43.7 in April from 40.8 in March, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a more modest increase to a reading of 42.2.

The Australian market closed lower, as investors cut their long positions ahead of the release of bank stress tests results on Thursday evening. The benchmark S&P/ASX200 closed at 3,867, down 23 points or 0.6% and the broader All Ordinaries index fell 22 points or 0.57% to 3,840.

In the resources sector, BHP Billiton fell 1.68%, its rival Rio Tinto declined 2.63% and Iluka Resources closed down 0.85% after copper futures for July delivery dropped 2.9% to $2.0825 a pound. Gold miner Lihir Gold slipped 0.34% on saying that it has its sights fixed on producing more than 1.5 million ounces of the precious metal annually in coming years. Newcrest Mining fell 3.33% and Newmont lost five cents to $5.50 after the price of gold moved down $3 per fine ounce in Sydney.

Oil and gas supplier Santos declined 2.19% even as it maintained its production guidance for 2009. Woodside Petroleum also closed down 0.31%, but Oil Search edged up 0.38%.

In the banking sector, Westpac Banking added 2.36% despite posting a 15% drop in its half-yearly profit. National Australia Bank rose 0.55% and ANZ gained 0.54%, but Commonwealth Bank slipped 0.55% and investment bank Macquarie Group fell 2.49%

Among insurers, AMP slipped 0.18%, Henderson Group fell 2.85% and AXA Asia Pacific moved down 1.67%, but QBE Insurance rose 0.65%.

Department store chain David Jones lost 1.20% after the company reported a 9.2% fall in its third-quarter sales. Woolworths slipped 0.34%, Wesfarmers, which owns Coles, tumbled 5.38% and Harvey Norman Holding fell 3.90%.

Among media stocks, News Corp fell 3.35%, Fairfax Media declined 1.83% and Seven Network moved down 3.14%, but Consolidated Media edged up 0.44%. Cement maker Adelaide Brighton slumped 6.52% after building products group Boral sold its 17.6% stake in the company for A$210 million.

On the economic front, Australia posted a merchandise trade balance of A$2.498 billion in March. The Australian Bureau of Statistics reported Wednesday that the trade surplus was higher than the A$2.11 billion balance reported for February, and was also above the A$1.7 billion balance projected by most economic analysts.

In another development, retail sales in Australia were up a seasonally adjusted 2.2 percent in March compared to the previous month, the Australian Bureau of Statistics said on Wednesday, standing at A$19.30 billion. That was well above analyst expectations for a 0.5 percent gain following the 2 percent decline in February.

The South Korean market fell modestly on profit taking after remaining closed on Tuesday for a public holiday. While foreign funds extended their buying spree for the fourth day in a row, domestic institutions locked in profits from recent gains.

The benchmark KOSPI closed at 1,393, down 4 points or 0.32% and volume was significant at 727.7 million shares worth 9.66 trillion won (US$7.56 billion). Gainers outnumbered losers by 412 to 405.

Steel maker POSCO gained 2.60% on hopes about improved demand in China. Among shipbuilders, Hyundai Heavy Industries gained 1.21% and Samsung Heavy Industries closed up 0.48%, but Daewoo Shipbuilding moved down 0.42%

Korean Air Line advanced 2.95% and Asiana Air Line moved up 2.29% on receding fears about swine flue and due to the strengthening of the won against the U.S. dollar.

Ssangyong Motor surged up nearly 15% after a study of Ssangyong's value by Samil Pricewaterhouse Coopers showed that the company could be rescued. On the other hand, Hyundai Motor and Kia Motor closed unchanged.

In the banking sector, Woori Finance rose 0.91% and Korea Exchange Bank edged up 0.53%, but KB Financial, the holding firm of Kookmin Bank declined 0.77%.

Among other notable stocks, technology stock Hynix Semiconductor drifted down 1.34%, market heavyweight Samsung Electronics fell 2.92%, energy stock KEPCO tumbled 3.71%, oil stock SK declined 1.65% and telecom stock KT fell 1.87%, while

LG Electronics closed flat.

The New Zealand market showed a modest gain following strong gains in the previous two sessions. The benchmark NZX-50 index closed at 2,831, up 12 points or 0.44%. Turnover was worth $94 million and advancers outnumbered decliners by 44 to 30.

Market heavyweight Telecom, which is facing a legal action brought by its rival Vodafone in the High Court at Auckland, rose 1.80%. Building products and construction firm Fletcher Building fell 1.73% after it raised a total of NZ$526 million ($302 million) in new capital.

Retailer Hallenstein Glasson advanced 3.45%, Warehouse Group closed up 0.80%, children's clothing retailer Pumpkin Patch rose 3.20% and Jeweler Michael Hill added 3.39%.

PGG Wrightson soared 5.71% after the ANZ Commodity Price Index for April showed a 2.5% jump in New Zealand commodity prices from March, the biggest rise in nearly two years.

Goodman Fielder surged up 7.28% on announcing its intention to sell its wholesale commercial oils unit to focus on its core operations. Tourism Holdings fell nearly 2% after it laid off 64 workers at its Hamilton manufacturing unit amid slowing demand for caravans and motor homes.

Among other notable stocks, Fisher & Paykel Appliances surged up 8.93%, Pike River Coal gained 3.66%, Freightways rallied 3.97% and Sky City closed up 0.72%, but Infratil fell 3.03%, Lion Nathan moved down 1.20% and Contact Energy edged down 0.82%.

On the other hand, energy stock TrustPower, resin maker Nuplex and Sanford closed unchanged. New Zealand Oil & Gas also closed flat after crude oil price oil price dropped to $53.84 a barrel on Tuesday after hitting a five-month high.

In economic news, the labor cost index released by the Statistics New Zealand showed that salaries and wages including overtime rose 3.3% year-over-year in the March quarter, slower than a 3.5% increase in the December quarter. During the first quarter, sales and wages including overtime rose 4.3% annually in the public sector and 3.1% in the private sector. Sequentially, salaries and wages including overtime increased 0.6% in the first quarter, the lowest quarterly rise in two years. This was reflected by a 0.6% rise each in the public and private sector.

The Chinese market extended its upward momentum for the fifth straight day, led by banking and coal stocks. The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, closed at 2,593, up 25 points or 0.98% after moving in a range of 2,597-2,553.

The Indian market was choppy owing to significant amount of profit taking following mixed global cues and uncertainty on the political front. The benchmark BSE Sensex was last trading at 11,986, down 124 points or 1.02% over the previous close.

Among the other markets in the region, Hong Kong's Hang Seng index rose 404 points or 2.46% to 16,834, Singapore's STI Straits Times index surged up 5.19% and Taiwan's TWII Weighed index advanced 2.93%.

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