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MUMBAI (Thomson Financial) - JAPAN

Nikkei finished down 0.6 pct at 15,564.69 as investors cashed in on gains in the past four sessions amid thin trading volumes with many foreign fund managers away for the year-end holidays.

News that the Japanese economy accounted for 9.1 pct of the world's nominal gross domestic product in 2006, falling below 10 pct for the first time since 1982, also dampened sentiment, along with the continued decline in domestic housing starts.

The broader Topix index slipped 0.6 pct to 1,499.94.

SOUTH KOREA

The KOSPI index closed up 0.1 pct at 1,908.62 as fund managers engaged in last-minute buying to boost their portfolios before trading for the year wraps up Friday.

Dec. 27 (Bloomberg) -- Asian stocks dropped for the first time in five days, led by banks, on concern falling U.S. home prices will lead to more mortgage-related losses and after a report that China set quotas for new loans.

Mitsubishi UFJ Financial Group Inc. led declines in Japan after U.S. home prices recorded the biggest slump in six years. China Construction Bank Corp. slid after Reuters said the nation's central bank set limits for new loans by China's four largest state-owned lenders.

``Housing prices continue to fall in the U.S. and as that erodes people's equity in their homes we could see consumer spending take a dive,'' said Hideyuki Ookoshi, who helps oversee $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``The feeling is that the U.S. economic outlook is dim.''

Korea Electric Power Corp., South Korea's biggest power producer, fell the most in five months after the government said it froze average electricity prices for next year.

The MSCI Asia Pacific Index lost 0.1 percent to 157.00 as of 6:04 p.m. in Tokyo, halting a four-day, 3.6 percent advance. The measure has advanced 12 percent this year, on course for its smallest annual gain in five years.

The Nikkei 225 Stock Average lost 0.6 percent to 15,564.69 and Hong Kong's Hang Seng Index slid 1 percent to 27,842.93. All other Asian benchmarks gained.

Mitsubishi UFJ, Japan's No. 1 publicly traded bank by value, declined 1.3 percent to 1,081 yen. Sumitomo Mitsui Financial Group Inc., the second biggest, lost 0.7 percent to 864,000 yen, extending its drop this year to 29 percent.

Housing Concerns

Home prices in 20 U.S. metropolitan areas fell 6.1 percent in October, the S&P/Case-Shiller home-price index showed yesterday, the steepest fall since the group started keeping year-over-year records in 2001.

Construction Bank, China's second-biggest lender, fell 3.2 percent to HK$6.73, halting a four-day, 5.8 percent advance. Industrial and Commercial Bank of China Ltd., the No. 1, lost 1.6 percent to HK$5.68, its first drop in five sessions. Bank of China Ltd., the third largest, slid 2 percent to HK$3.85.

ICBC, Construction Bank and Agricultural Bank of China were instructed to keep their new loans next year within 2007 targets, Reuters said, citing an unidentified person at one of the financial companies. The quota for Bank of China was scaled back to 260 billion yuan ($35.5 billion) from 280 billion yuan this year, according to the report.

Korea Electric lost 3.9 percent to 39,900 won, its sharpest decline since July 27. The South Korean government froze average electricity prices for next year, the Ministry of Commerce, Industry and Energy said yesterday.

Energy Stocks

Limiting declines, Woodside Petroleum Ltd., Australia's second-biggest oil producer, climbed the most in four months after crude strengthened above $96 a barrel for the first time this month. BHP Billiton Ltd. advanced on speculation the jump in copper and gold prices will boost profits.

Woodside advanced 4 percent to A$49.94, its biggest jump since Aug. 20. BHP Billiton, the world's No. 1 mining company and Australia's largest oil producer, added 1.4 percent to A$41.10, extending its gain this year to 62 percent. Rio Tinto Group, the world's third-largest mining company, rose 2.2 percent to A$135.41.

Crude oil futures added 2 percent to $95.97 a barrel in New York yesterday, the highest close since Nov. 26. The contract was recently at $95.84 in after-hours trading.

Copper futures advanced 0.5 percent yesterday. Gold climbed to a four-week high yesterday after the U.S. dollar slid against the euro. The precious metal for February delivery bought $827.30 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange.

Chinese Broadband

Chinese telecommunications companies surged in Hong Kong after the national government approved plans for a high-speed mobile-phone network, signaling a reorganization of the industry is under way.

China Telecom Corp., the nation's largest fixed-line phone operator, gained 6.3 percent to HK$6.28, its biggest jump since Nov. 20. The stock has risen 47 percent this year. China Communications Services Corp., the engineering unit of China Telecom, climbed 6.9 percent to HK$7.62. ZTE Corp., China's second-biggest phone-equipment maker, rose 7 percent to HK$41.90, its steepest climb since Nov. 30.

China approved plans for ``a new generation of wireless broadband mobile communications network,'' the State Council, or cabinet, said in a statement last night, without giving details.

``The news is a sign that China is a step closer to issuing 3G licenses next year,'' said Wong Chi Man, an analyst at China Everbright Securities Co. in Hong Kong.

AUSTRALIA

The S&P/ASX 200 ended up 0.4 pct at 6,350.9 in thin trade, with investors favouring heavyweight resources stocks after strong gains in gold, copper and oil prices overnight.

With the market closed for Christmas and Boxing Day, many traders opted to stay away from their desks for the rest of the week, resulting in very light volumes. The All Ordinaries finished 0.6 pct higher at 6,426.4.

CHINA

The benchmark Shanghai Composite Index closed up 1.44 pct at 5,308.89 as institutional investors picked up stocks for window-dressing on the second to the last trading day of the year, with the key index regaining 5,300 points.

The Shanghai A-share Index rose 1.45 pct to 5,571.34 and the Shenzhen A-share Index was up 1.42 pct at 1,527.81.

The Shanghai B-share Index rose 1.03 pct to 366.86 and the Shenzhen B-share Index was up 1.59 pct at 711.92.

TAIWAN

The weighted index closed up 1.93 pct at 8,313.72 as investors began to bet on a favourable court ruling for opposition presidential candidate Ma Ying-jeou tomorrow.

PHILIPPINES

Manila's composite index finished up 1.5 pct at 3,667.64 stretching gains from the previous session as fund managers continued to spruce up portfolios for the year-end.

The broader all-share index gained 1.1 pct to 2,243.12.

Manila's financial markets will be closed on Monday and Tuesday for New Year celebrations.

LONDON, Dec 27 (Reuters) - The yen fell to its lowest in around 1-1/2 months versus the euro on Thursday, as higher commodity prices lifted European equities and broadly boosted risk appetite in holiday-thinned markets. Oil prices have risen strongly since the start of the week and went as high as $96 a barrel CLc1 on Thursday before retreating slightly, while gold held near a one-month high .

European equities gained, led by mining stocks, while in the foreign exchange markets investors bought high-yielding currencies of commodity producers such as Australia.

This in turn put pressure on the yen, which is often used as a source of cheap funding for such trades. Expectations that the Bank of Japan will delay raising interest rates until well into 2008 reinforced the yen's status as a funding currency.

"We've had friendly stockmarkets so there has been less risk aversion and that has seen investors sell the yen," said Antje Praefcke, currency strategist at Commerzbank Corporates and Markets in Frankfurt.

At 1120 GMT the euro was trading at 165.84, just below a seven-week high of 165.89 yen according to Reuters data .

The Japanese currency -- which often trades as a proxy for the tightly controlled Chinese yuan -- failed to benefit from a jump in the dollar/yuan exchange rate.