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Asian Markets Extend Losses, Japan Sheds 1.3%

CNBC.com
Wednesday, 28 May 2008 | 5:03 AM ET

Asian markets were mostly lower Wednesday, as a cloudy U.S. economic outlook and lingering inflation fears left investors skittish. Australia, Japan and South Korea all closed over 1 percent lower.

A rally in the U.S. dollar capped crude prices, although oil's 34 percent climb so far this year has raised fears about tighter consumer spending and business investment in the world's largest economy.

Energy firms such as South Korea's SK Energy and Japan's Inpex Holdings slipped after oil prices fell $4 to $128 a barrel due to the stronger dollar, and concerns over moves to cut Asian fuel subsidies could hurt demand growth.

Tokyo's Nikkei 225 Average fell 1.3 percent, with natural resource shares such as Mitsubishi Corp down after oil prices slipped. In a broad selloff, Toshiba Corp was among the standouts, extending gains after the company announced that its unit Westinghouse and partner Shaw Group had signed an agreement to build two new nuclear units in South Carolina.

Seoul shares finished over 1 percent lower, dipping into negative territory again after an early advance, with techs losing ground on continued worries about inflationary pressure, outweighing gains in airlines. Shares in LG Electronics shed 3.6 percent on speculation that it may bid for U.S. conglomerate GE's appliance unit.

Australian shares fell 1.2 percent to a one-month closing low, dragged down by heavyweight resource firms such as BHP Billiton and Woodside Petroleum on weaker commodity prices.

Hong Kong stocks slipped 0.1 percent, tracking soft regional markets and on losses in oil and gas producer CNOOC, after crude prices fell on a stronger U.S. dollar. China's flag carrier Air China gained over 2 percent on the back of lower oil prices. Hong Kong's dominant carrier, Cathay Pacific climbed 2 percent as well.

Singapore's Straits Times Index gained 0.6 percent. Raffles Education rose 5.5 percent to a near three-month high after the firm formed joint ventures with India's Educomp Solutions in India and China.

China's Shanghai Composite Index jumped over 2.5 percent helped by a rebound in banking stocks after the government took fresh steps to regulate large share sales. Trading volumes though were very light. Banking and property shares continued to rebound. Pudong Development Bank and Vanke, the biggest listed developer, both advanced.