KEY POINTS:
New Zealand stocks yesterday hung on to gains in the wake of the US Government's bailout of mortgage companies Fannie Mae and Freddie Mac but in other markets shares fell.
The NZX-50 closed up 1.98 points, or just 0.06 per cent, after a 38-point gain the day before.
Contact Energy jumped 29c to a three-month high of $9 on speculation that majority owner Origin Energy may increase its stake with the planned takeover by BG Group now unlikely after a gas joint venture was announced with a US oil company.
Australia's S&P/ASX200 was down 1.7 per cent after Monday's 3.9 per cent gain,
In Japan the Nikkei average fell 1.8 per cent yesterday, a day after the US Government's bailout of the mortgage firms sparked a broad market rally.
"Today is the day after the party," said Fujio Ando, senior managing director at Chibagin Asset Management. "In hindsight, yesterday's rally was merely caused by the buying back of oversold shares."
Market participants said investors also remained cautious ahead of earnings from US investment banks, such as Lehman Brothers.
"The US rescue plan has prevented a worst-case scenario but when you give it some thought, the situation has not changed. It does not help improve US employment figures, for instance," he said
On Monday, the Nikkei average jumped 3.4 per cent, posting its biggest gain in five months. Korea's Kospi index lost 1.9 per cent yesterday.
The Dow Jones finished up 2.59 per cent yesterday while the Standard & Poor's 500 rose just over 2 percent.
Matthew Buckland, a dealer at CMC Markets said: "Wall St certainly posted a solid gain on the back of the Fed's intervention but the initial cheer we saw especially in the US financial sector could prove short lived."
