Continued signs of trouble in the financial sector and worrisome economic data sent Asian shares to their lowest in more than six weeks Wednesday, bolstering the dollar and other assets that shine in uncertain times.
Sterling continued it slide to a its lowest in more than seven years against the dollar, while the euro touched a six-week low. Oil futures gained on trading related to the transition towards a new front month contract.
In a somber greeting for new U.S. President Barack Obama, the main U.S. indexes shed up to 5.8 percent, again weighed down by fears of further big losses in the banking sector. Markets were also disappointed that Obama in his inauguration speechdid not provide further specific details about how he would tackle the economic challenges facing the world's largest economy.
Japan's Nikkei 225 Average ended 2 percent lower, hitting a two-month low on rekindled fear about the global financial sector that sent banks such as Sumitomo Mitsui Financial Group sliding. Tech shares extended losses and exporters slipped as the dollar remained below 90 yen, while Sony fell 2.7 percent after a newspaper said it is preparing to announce on Wednesday or Thursday details of its December restructuring plan, including where job cuts will fall. But shares of Elpida Memory jumped over 5 percent after the company said it was in talks with Taiwanese DRAM makers including Powerchip, ProMOS Technologies and Rexchip, on a possible merger as well as other options.
South Korea's KOSPI finished 2 percent lower with banks hurt by worries about restructuring costs after they decided to extend credit lines to troubled ship makers and builders. But the reported end of talks for a deal between Daewoo Shipbuilding & Marine Engineering and Hanwha Corp sent both companies' shares higher.
Australian stocks closed at their lowest in nearly two months, down 1 percent, led by losses in global miner BHP Billiton after its plans to cut operations and jobsstoked concerns the global recession will further dent company profits. Bank stocks fell more than 3 percent, with National Australia Bank, Australia's top bank by assets, slid 4.2 percent its lowest level since October 1997 as worries about rival UK banks stoked fears about its Yorkshire and Clydesdale operations.
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Hong Kong shares were down 2.9 percent, following new profit warnings from Chinese resources and financial companies amid fresh worries the global financial crisis is far from over. Index heavyweight HSBCHoldings lost a further 4.3 percent after sliding as much as 8.8 percent on Tuesday, battered by worries the UK-based lender may have to raise a massive amount of capital to offset losses as more loans and mortgages go sour.
Singapore's Straits Times Index slipped 1.1 percent, led by DBS Group, after the government said the city-state was in its worst recession ever. DBS fell 1.3 percent, Oversea-Chinese Banking dropped nearly 2 percent.
China's Shanghai Composite Index edged down 0.5 percent, but textile and property shares were strong on hopes for government support those industries. HuaFang Textile raced up its 10 percent daily limit during trading. The official Shanghai Securities News reported that China's National Development and Reform Commission, the top planning agency, would soon submit to the State Council, or cabinet, a proposal to aid the country's textile industry, after China announced plans to bolster its steel and auto sectors.