High Oil and Inflation Woes Hurt Asian Stocks

Asian markets were mostly lower Monday, with Japan and Australia both closing down. Skyrocketing oil prices remained the key theme as investors worried over the impact of record oil prices on the health of the global economy.

Oil prices rose to a record near $143 a barrel on Friday as a drop in global equities markets lured more investors into commodities. Crude oil maintaining that momentum, currently trading above the $141 level.

Japan's Nikkei 225 Average finished 0.5 percent lower to book its worst first half since 1995, though it gained about 8 percent this quarter, recovering about half of what it lost since a year-low hit in mid-March. Retailers weighed on the market, with Takashimaya down 1.3 percent after the department store operator's first-quarter operating profit fell 8 percent and it cut its annual sales outlook.

Seoul shares closed 0.6 percent lower as record high oil prices weighed on energy sensitive issues such as Korean Air Line, while memory chip makers fell after target price cuts by a major investment bank.

Australian shares slipped 0.4 percent as persistent credit worries pressured the major banks, though strong commodity prices buoyed resource firms such as BHP Billiton. But Babcock & Brown closed almost 18 percent after gaining a reprieve from its lenders with regards to a debt review. The Australian market lost nearly 17 percent in the fiscal year to June 30, logging its worst financial year performance since 1982.

Hong Kong shares closed 0.3 percent higher as resource counters climbed on sky-high commodity prices, but index heavyweights HSBC Holdings and top Asian oil refiner Sinopec slid amid waning global investor sentiment. Upstream oil producer CNOOC jumped 2.4 percent as U.S. crude stayed above $141 per barrel in Asian trade after coming within a whisker of $143 per barrel on Friday.

Singapore's Straits Times Index closed flat with blue chips such as property, bank and telecom stocks under selling pressure. Shares in dye treatment firm China Fibretech opened 7 percent below their initial public offering (IPO) price of S$0.21 at the start of trade.

China's Shanghai Composite Index extended Friday's 5 percent slide, slipping 0.5 percent amid very thin trade as concern about inflation and rising global oil prices continued to dog the market.

© 2008 CNBC.com