OVERSEAS MARKETS : Stocks Generally Lower in Cautious Trading

Tokyo stocks closed lower Monday after news of rising oil prices and talk of investigations into speculative activity hit the market in afternoon trade.

Thin volume, scattered index-linked selling and concern that high oil prices could mean even tighter credit fueled the decline.

The key 225-share Nikkei index lost 557.94 points, or 2.15%, to close at 25,420.43 after rising 308.41 on Friday. Volume was 360 million shares, against 600 million on Friday.

“Japan has promised trading partners it will spend more on public works,” said Paul Migliorato, broker at Jardine Fleming Securities. “If it can’t cut that spending to control oil-driven inflation, it will put upward pressure on interest rates.”

There were fears that costlier oil could mean even tighter credit, brokers said.

The benchmark North Sea Brent Blend crude futures jumped by more than $1 a barrel on London’s International Petroleum Exchange, almost matching early gains in Singapore, where Dubai crude futures hit daily trading limits. Brent for October delivery stood at $27.85 per barrel, a rise of $1.10 from Friday.

After losing 16.3% in August, the benchmark Nikkei index began its first trading day in September by firming steadily after the open, gaining more than 100 points above Friday’s close of 25,978.37 in the first 10 minutes.

But news that Saudi Arabia had raised its prices for liquefied petroleum gas as of Sept. 1 sparked a selloff in afternoon trading, driving the Nikkei down to close on its lows. Oil issues were one of the few sectors to gain on the day.

The broader first section index, Topix, slumped 28.05 points to 1,945.92 after gaining 17.95 on Friday. The Topix has lost 12.4% of its value since the start of August.

“Because of the (Labor Day) holiday in New York, many people don’t know what sort of attitude to take to the market,” said Daniel Marull, a trader at Sanyo Securities. “We had good volume for the past four days, but it will be very weak today.”

In Hong Kong, stocks edged slightly higher in very slow trade with investors sidelined for fear of sudden changes in the Middle East standoff and in the absence of other market-moving factors, brokers said.

“There’s little to talk about at the moment,” a broker at a British brokerage said. “There are no other factors really apart from the Middle East.”

The Hong Kong index closed at 2,014.77, down 13.60 points, while the Hang Seng index finished at 3,066.81, off 20.69 points.

Taiwan stocks closed lower across the board as nervous investors, still worried about the possibility of war in the Persian Gulf, took profits on gains seen over the last two sessions, dealers said. The weighted index fell 193.22 points, or 5.1%, to finish at 3,574.89 against Saturday’s 3,768.11 close.

In London, share prices closed a touch firmer after a session devoid of major news or direction. The Financial Times-Stock Exchange 100 index ended 3.8 points higher at 2,166.6.

In Frankfurt, West Germany, shares ended mixed at the close of a lifeless trading session. The DAX index of 30 leading shares eased 0.29 points to end at 1,629.22.

In Paris, share prices closed sharply lower in thin trading. The CAC-40 index ended at 1,644.01, down 46.16 points, or 2.73%.

The dollar rose against most major foreign currencies Monday and gold prices were higher in thin trading.

In Frankfurt, dealers said they did not want to get caught without dollars in their portfolios if fighting broke out in the gulf.

One noted that U.N. Secretary-General Javier Perez de Cuellar failed to make any diplomatic progress this weekend in talks to mediate the dispute.

But a London trader said there was no fundamental reason for the dollar’s rise.

“There have been no large positions taken and nothing has changed. It’s just a lack of fresh ideas,” he said.

Without any fundamental news to guide the market, dealers said most of the week would be spent predicting the outcome of Friday’s U.S. employment figures.

But the August jobs data will likely confirm other numbers suggesting a slowdown in the U.S. economy, traders said.

In Tokyo, the dollar fell to a closing 143.55 Japanese yen from 144.50 yen at Friday’s close. Later, in London, it fell to 143.54 yen.

In London, the British pound fell to $1.8730 from $1.8900 late Friday.

Other late dollar rates in Europe, compared to late Friday: 1.5837 German marks, up from 1.5758; 1.3158 Swiss francs, up from 1.3075; 5.3080 French francs, up from 5.2825; 1.7840 Dutch guilders, up from 1.7685; 1,179.00 Italian lire, up from 1,169.00, and 1.1535 Canadian dollars, down from 1.1552