Asian markets fell and gold rose Wednesday on investor worries of lower corporate earnings in a weakening global economy, even as money markets continued to heal gradually.
This week has seen the biggest and most direct effort yet by policymakers around the world to thaw short-term lending markets has had some success, particularly in slowing plunging global equity markets. Money market pressures were easing slowly and the risk of a system-wide failure has passed for now. Governments around the world have ushered in a new, uncertain era in banking, having pledged about $3.2 trillion to among other things guarantee bank deposits, back interbank borrowing and recapitalise financial institutions.
Oil prices were not far from a 12-month low hit on Friday, currently trading at the $78 a barrel level, while the yen and U.S. Treasuries climbed, reflecting fears the damage that the financial crisis inflicted on the global economy is still working its way through the system.
The yen rose broadly on renewed unwillingness among investors to take risks and coinciding with a fall in U.S. stock futures. The euro lost 0.7 percent against the yen to 138.12 and dropped 0.4 percent against the dollar to $1.3560. The U.S. dollar fell 0.5 percent from late New York trade to 101.57 yen
Japan's Nikkei 225 Average reversed course and rose 1.1 percent as the sense of panic over the financial crisis eased, though worries about the global economy and company earnings sent the market lower in earlier trade. But Toyota Motor and other automakers slid on the gloomy outlook for U.S. car sales. Mazda Motor tumbled nearly 10 percent after a report that it has scrapped plans to build a second U.S. factory.
Seoul shares ended 2 percent lower with manufacturers and banking issues leading the retreat from Tuesday's sharp gains, as worries about a weakening global economy and its impact on consumer sentiment deepened. POSCO, the world's No.4 steelmaker, fell 8.52 percent, battered by a grim fourth quarter outlook, while Hana Financial Group lost 7.59 percent.
Australian shares fell 0.8 percent, trimming two days of strong gains, as resources stocks such as Rio Tinto took a hit on expectations a sharp global economic slowdown would hit demand.
Hong Kong shares fell 5 percent as blue chips sank on worries about a slowdown in the global economy and sagging profits. But China Eastern Airlines avoided the downdraft, climbing 5.4 percent on mainland media reports that the airline's proposed merger with smaller rival Shanghai Airlines had been approved in principle by the Shanghai government.
Singapore's Straits Times Index was down 4.3 percent with financials such as DBS Group and UOB,losing ground.
China's Shanghai Composite Index was down 1.1 percent. Oil refiner Sinopec sank, while Jiangxi Copper and Wuhan Steel also declined.