Asian markets pared morning losses, but still closed broadly lower in the afternoon session Monday, with exporters hit hard on concerns the U.S. economy may be heading into a recession. Japan and South Korea both closed over 2% lower.
Data on Friday showing U.S. payrolls shrank in August for the first time in four years suggested that a credit squeeze stemming from problems in the U.S. subprime mortgage market is beginning to stifle growth in Asia's top export market. This also stoked expectations for a hefty Federal Reserve rate cut this month.
Japan's Nikkei 225Average ended down 2.2% after worse-than-expected U.S. and Japanese economic data took a toll, with exporters such as Sony hit especially hard by a stronger yen. Shares were sold across the board after Wall Street tumbled on Friday. Real estate firms such as Mitsui Fudosan extended last week's losses on continuing worries about a slower property market.
South Korea's KOSPI finished down 2.6% -- its worst fall in three weeks -- as exporters slid after unexpectedly weak U.S. jobs data raised concerns about the outlook for South Korea's second-biggest overseas market. LG.Philips LCD fell 4.9% while Hyundai Motor lost 4.3%.
Australia's S&P/ASX 200 Index closed 1.3% lower, with U.S.-exposed firms such as Westfield Group declining on that weak U.S. jobs data .
Singapore's Straits Times Index was off its lows, down 1.35%, in line with regional markets and tracking losses on Wall Street. Banks led the decliners with DBS Group, United Overseas Bank, and Oversea-Chinese Banking all sharply lower.
Hong Kong stocks pared losses in the afternoon, with blue chips falling 0.5% and China plays dropping 1.3% on concerns over the state of the U.S. economy. But blue chips' losses were buffered by gains in Hong Kong Exchanges and Clearing after the local government raised its stake in the city's bourse operator.
Chinese shares rebounded in the afternoon on bargain hunting in modest volumes, with the Shanghai Composite Index closing 1.48% up. Still, sentiment remains weak after the 4% drop over past two sessions.