Asian markets took a turn into negative territory while the U.S. dollar stayed weak Wednesday as worries resurfaced about the economy and a global financial crisis, but some shares gained on reports of potential deals such as Chinese interest in a stake in BHP Billiton, the world's biggest mining company.
A week-long rally in Asian shares is under threat after U.S. savings and loans firm Washington Mutual warned on Tuesday of a large quarterly loss, while Federal Reserve minutes revived fears of a recession in the U.S. economy.
The dollar remained weak on concerns about the U.S. economy, slightly pushing up oil and gold prices given that a falling U.S. currency makes the commodities more attractively priced for buyers in other currencies.
Sentiment soured in the U.S. financial sector Tuesday, after Washington Mutual, the largest U.S. savings and loan firm, said it expected a large quarterly loss. Washington Mutual also slashed its dividend even as it received a $7 billion capital infusion, raising concerns about
upcoming results from the rest of the sector. Meanwhile, minutes from the Federal Reserve's latest meeting showed some of the central bankers saw the possibility of a "prolonged and severe economic downturn."
Tokyo's Nikkei 225 Average fell 1.1 percent to book its lowest close in a week as exporters suffered from revived worries about the U.S. economy, while a brokerage downgrade on Tokyu Land triggered a sell-off in property shares. Financials, including top lender Mitsubishi UFJ Financial, weighed on the market after Washington Mutual's warning of a large quarterly loss.
Australian shares slipped 0.9 percent, dragged down by financial firms on a bleak outlook for bank profits. But BHP Billiton jumped on reports that China is planning to buy an over 9 percent stake in the world's top miner. Financial firms eased on persistent worries about a deteriorating outlook for bank profits. The International Monetary Fund said turmoil in credit markets could spread with losses possibly approaching $1 trillion. Among the top banks, National Australia Bank and Commonwealth Bank of Australia both fell.
Hong Kong stocks were 1.4 percent lower as investors worried over the health of the global economy. Singapore's Straits Times Index was also lower.
China's Shanghai Composite Index fell 5.5 percent, breaking a four-day rising streak as turnover shrank as blue chips were sold and the market retreated from technical resistance. Among large caps, PetroChina and Sinopec declined. The top bank, Industrial & Commercial Bank of China also slipped. But Baoshan Iron & Steel bucked the trend, rising amid speculation that its parent group might seek a stake in mining giant BHP Billiton.
Markets in South Korea are closed for the general elections. They will reopen on Thursday.