Asian stocks were suffering a case of the nerves ahead of the U.S. Federal Reserve meeting later Wednesday. Markets started the session on a strong note, but then slipped into negative territory with Hong Kong closing 2.6 percent lower and Japan shedding 1 percent.
The outlook beyond the Fed interest rate decision, remains murky, with hopes of a U.S. economic revival offset by a handful of stocks tumbling anew on fears of a poor 2008. The biggest decliners in Asia include South Korea's Hyundai Heavy Industries, the world's top shipbuilder, and its rivals Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries. All three shed more than 5 percent as analysts predicted a thinner order book.
The Nikkei 225 Average finished almost 1 percent lower as investors dumped shares on worries ahead of a Federal Reserve rate cut decision, with Kyocera and other chip-related shares sliding after a barrage of bad news. Banks tumbled in afternoon trade after reports that Mizuho Financial Group is considering injecting an additional $1.9 billion into its unit Mizuho Securities, as the brokerage continues to falter from subprime investments.
South Korea's KOSPI dropped 3 percent to a near nine-month closing low, as shipbuilders led by Hyundai Heavy Industries sank on fears that orders momentum would weaken significantly on slowing global economic growth.
Australia's S&P/ASX 200 Index fell for a second day, slipping 1.7 percent as investor doubts about credit quality at the top banks offset gains in miners on strong base metals prices. Uncertainty over stretched bank balance sheets, questions about whether Chinese growth could be counted to buffer the Australian economy from a U.S. slowdown, and signs that Australian consumers might be trimming their spending all weighed on the market.
Hong Kong stocks erased opening gains to close 2.6 percent lower as weak mainland stock prompted investors to lock in profits, but oil producer CNOOC advanced a day after previewing its 2008 strategy. Life underwriter Ping An Insurance looked set to post a third-straight decline amid uncertainties about its fundraising efforts, while rival China Life paced the steep losses of its shares traded in Shanghai.
Singapore's FTSE Straits Times Index closed 1.6 percent lower after a positive start. But shares of Keppel Land advanced after the firm reported a seven-fold increase in net profit for its fiscal fourth quarter.
Chinese shares closed lower with financial companies falling sharply on concerns of further monetary tightening amid market talk that January inflation figures could be over 7 percent. China's Shanghai Composite Index had earlier risen as much as 2.2 percent on bargain hunting, but ended 0.9 percent in the red.