Stocks Restrained Ahead Of Earnings, Tokyo Flat

Japan stocks ended flat on Wednesday as weak machinery orders data dented manufacturers such as Kubota.

Japan stocks ended flat on Wednesday as weak machinery orders data dented manufacturers such as Kubota, while gains in other share markets were muted in cautious trade ahead of corporate earnings reports.

That wariness was expected to continue on European markets, with financial bookmakers predicting the FTSE 100 share index would open flat to just 2 points higher.

Concerns that stock markets -- some of which hit successive all-time highs in the past six sessions -- were overvalued, coupled with nagging doubts over the strength of the U.S. economy, lifted Japanese government bond (JGB) futures off a three-month low.

The machinery orders data reinforced expectations the Bank of Japan will be in no hurry to raise interest rates, and added to yen losses against the euro.

The Nikkei ended up just 0.03 percent, while the MSCI's broadest index of shares elsewhere in Asia was 0.4 percent higher.

The weaker-than-expected machinery orders data -- orders fell 5.2 percent in February, while markets had expected just a 0.2 percent drop -- knocked down shares in Fanuc Ltd., a maker of industrial robots, and Kubota Corp.

"Retail investors who had bought Tokyo shares amid global stock sell-offs have been taking profits since the Nikkei regained 1,000 points ... making the market's upside heavy," said Takahiko Murai, general manager of equities at Nozomi Securities.

South Korea's benchmark KOSPI index hit its sixth straight record, lifted by LG.Philips LCD Co. Ltd's better-than-expected results and positive outlook.

The KOSPI index ended up 1 percent, while LG.Philips scored an 8.2 percent gain -- its biggest in more than two years.

Singapore's Straits Times, which earlier hit a record high, later dipped back into a 0.4 percent drop. Hong Kong's Hang Seng was flat, while Taiwan's main index gained 0.5 percent. Thailand's share index rose 0.5 percent on expectations the central bank would cut interest rates.

JAPAN BONDS RISE

The dollar traded at 119.22 yen still in sight of a six-week high of 119.39 yen, while the euro was at $1.3425 sliding from a 2-year high of $1.3457 hit on Tuesday.

The European Central Bank is expected to keep interest rates on hold at a meeting on Thursday (click on for a preview of the ECB meeting).

JGB investors took their cue from gains in U.S. Treasuries in Asia and the steeper-than-expected drop in Japanese private-sector machinery data.

June futures climbed 0.42 point to 134.23, while the 10-year yield was off 4 basis points at 1.640 percent.

"The machinery orders data encouraged market participants to buy back JGBs, especially after a fall in U.S. bond yields overnight," said Masuhisa Kobayashi, chief JGB strategist at Barclays Capital.

Oil prices steadied after gains on Tuesday as investors turned their attention to Iran's nuclear activities and dwindling gasoline stocks in the United States, the top consumer. U.S. crude for May delivery was up 2 cents at $61.91 a barrel.

Spot gold was steady at around $677 an ounce, holding near a six-week high hit the previous day.