Asian markets fell Friday, hurt by resource-related shares stung by oil's 10 percent decline this week and by weaker-than-expected results from Merrill Lynch, which deflated hopes for a recovery in the financial sector.
Shares extended losses after the Wall Street Journal reported U.S. mortgage giant Freddie Mac was considering raising capital by selling as much as $10 billion new shares to investors, many of whom are expected to be existing shareholders.
Persistent worries about the stability of the financial sector continued to weigh on the U.S. dollar, which shed early gains, especially after Merrill Lynchposted a loss that was more than twice as large as expected.
Crude oil prices took another hit, falling over $5 to settle below $130 a barrel in New York trade Thursday. Oil is currently holding steady at $130 in the Asian session. The drop weighed on energy counters such as Japan's Inpex Holdings and Australia's Woodside Petroleum, both finishing sharply lower.
Japan's Nikkei 225 Average slipped 0.7 percent, marking its sixth straight week of falls as Kyocera and other high-tech shares dropped on disappointing results from U.S. firms such as Google . Mitsubishi Corp and other trading firms slid after oil lost over $15 in three days. Banks buoyed earlier in the day pared gains as investors grew increasingly nervous about U.S. corporate earnings.
Seoul shares closed 1 percent lower after gaining as much as 1 percent earlier in the session, as worries about U.S.credit markets and bank earnings outweighed positives from a fall in oil prices.
Australian finished fell 1.2 percent lower, as another drop in oil prices hit heavyweight resource firms such as Santos, which lost over 6 percent, while ongoing credit worries pressured financial firms such as Macquarie Group.
Hong Kong shares closed 0.6 percent higher after a late surge. The Hang Seng had been negative for most of the session after lower crude prices sent oil producer CNOOC and coal stocks tumbling.
Singapore's Straits Times Index dropped 0.6 percent. Palm oil stocks took a beating after crude oil prices extended losses. Wilmar International, the world's largest listed palm oil trader, tumbled as much as 6.7 percent to hit a 15-week low.
China's Shanghai Composite Index closed 3.5 percent higher. Oil refiners led the advance, together with airlines on the overnight decline in oil prices.