Asian Markets Drift Lower as Credit Fears Linger

Asian stocks had a shaky performance Wednesday with markets drifting back and forth for most of the session, but ending mainly lower as credit worries and fears over the health of the U.S. economy lingered.

The U.S. dollar was little moved near a record low against the euro and a three-year low against the yen ahead of more data expected to show the U.S. economy remained weak in February.

Japan's Nikkei 225 Average ended a tad lower as worse-than-expected company spending data dampened investor confidence about the health of the domestic economy. Strong gains in Fast Retailing on an upbeat earnings outlook and trading houses like Marubeni Corp were offset by falls in financials such as Mitsubishi UFJ Financial Group on a darkening economic outlook and lingering global credit market jitters. Japanese companies cut spending on plant and equipment more than expected in the final quarter of 2007 compared with a year earlier, pointing to a downward revision to GDP and underlining views that the Bank of Japan will leave interest rates on hold for some time.

Seoul stocks finished almost flat supported by technology companies such as LG Electronics and Hynix Semiconductor, while Hyundai Engineering climbed on hopes for a sale by creditors.

Australian shares erased early gains to end little changed, after financial stocks like Westpac Bank turned negative as worries about credit markets and a U.S. recession crept back. While talk of a looming rescue plan for bond insurer Ambac Financial Group, and hopes Tuesday's domestic interest rate rise would be the last for a while, had lifted the banks for most of the session, they couldn't sustain the gains.

Hong Kong stocks ended flat, but heavyweight China Mobile dropped amid further talk of an imminent telco restructuring that could undermine the cellular operator's dominant position in mainland China. Resource shares also fell, pacing declines in commodities, driving blue chips and Hong Kong-listed shares in mainland companies to their lowest level since Feb. 11.

Singapore's Straits Times Index edged lower, with bank counters such as United Overseas Bank on the decline.

China's Shanghai Composite Index closed 1 percent lower, dragged down by heavy industrial shares, as shareholders in Ping An Insurance met to vote on its proposal to make one of the world's largest equity issues. Many analysts said the result of the vote was too close to call, but market opinion was swinging towards the view that the proposal would probably pass after Ping An conducted a strenuous lobbying campaign with major shareholders. Investors worry about the battered stock market's ability to absorb the huge equity issue, which could total some 120 billion yuan (US$16.9 billion), and that passage of Ping An's proposal could encourage other large companies to make big cash calls.