Markets traded mostly lower in Asia Tuesday as banking stocks were battered across the board after Citigroup , which posted a 57 percent fall in third-quarter profit on Monday, said U.S. consumer credit will likely weaken this quarter after mortgage delinquencies accelerated.
Investors sold top Japanese lender Mitsubishi UFJ Financial Group, South Korea's Kookmin Bank, Singapore's OCBC and Australia's Macquarie Bank.
But a surge in crude oil prices powered energy stocks on expectations that record high oil prices would boost profits. Japan's oil explorer INPEX Holdings and Australia's oil and gas producer Santos were both higher.
Investors in China continued to pour money into equities after a top regulator made soothing remarks about the stock market. This led the Shanghai Composite to trade in record-breaking territory on Tuesday. The index was up nearly 1% in afternoon trading.
China CITIC Bank shares rose more than 2% after a Chinese regulator confirmed it is bidding for a stake in U.S. investment bank Bear Stearns.
The Hang Seng closed lower by 2%, but Chinese-listed shares traded in Hong Kong rose to lifetime highs. The H-share index was up 0.5%. PetroChina, which is expected to list in Shanghai this month closed higher, while CNOOC also gained.
Tokyo's Nikkei 225 average was over 1% lower as shares tracked Wall Street falls fed by renewed credit concerns. Nomura Holdings, Japan's largest brokerage, said it would pull out of the U.S. residential mortgage-backed securities market and cut a quarter of its U.S. workforce, pushing it to a big quarterly loss and renewing concern in Japan about the impact of the subprime mortgage issue.
Seoul shares were weaker as lenders such as Kookmin dropped on resurfacing concerns about credit conditions, while a surge in oil to a record hit fuel-sensitive stocks such as Korean Air. But Daewoo Shipbuilding surged a day after posting solid profit results, while shipping firm STX Pan Ocean again jumped amid confidence about a boom in shipments of dry bulk goods, which make up most of its earnings.
Australian shares were down over 1%, with the major banks leading declines on fresh concerns about credit markets. The top Australian banks were all lower with National Australia Bank, Commonwealth Bank of Australia and Westpac Banking slipping.
Oil and gas producer Santos was on a trading halt as the South Australian state government lifted a 28-year-old rule limiting any shareholder from owning more than 15% in the firm.
Singapore's Straits Times Index closed 1.3% lower fell as financial issues negatively affected market sentiment. DBS Group, UOB and OCBC shares were all lower.