Asian Markets Struggle After the Yen's Surge

Asian markets were mostly lower Thursday with Japanese stocks tumbling after the yen spiked to a five-month high against the dollar, with investors seeking to trim riskier bets amid growing concerns about the health of the global economy.

Doubts about the prospects for a swift and strong recovery also weighed on oil prices, which tumbled more than 4 percent on Wednesday, but other Asian stock markets steadied after a late rally on Wall Street.

Leaders from the Group of Eight nations said the world economy still faced serious risks and it was too soon to unwind stimulus packages designed to help developed economies emerge from the recession. The latest forecast from the International Monetary Fund predicted the global contraction would be worse in 2009, but growth would be higher in 2010.

Rising risk aversion saw the yen gain strongly against the U.S. dollar and the euro . Oil prices continued their recent slide, falling below $61 a barrel after a U.S. government report showing distillate stocks have risen to near a 25-year high.

Japan's Nikkei 225 Average hit its lowest close in seven weeks, down 1.3 percent, weighed by exporters such as Canon as the yen stays near five-month highs against the dollar amid growing doubts about a speedy recovery in the global economy.

Seoul shares ended flat with a central bank decision to hold rates steady having a limited impact on markets, but gains by financials including Woori Finance Holdings lent support to the index.

Australian shares closed down 0.1 percent, off earlier lows, with investors seen reluctant to commit cash before the upcoming corporate earnings season. Rio Tinto shares finished 1.2 percent with investors concerned after China detained four Rio executives on espionage allegations.

More From CNBC.com

• Get After-the-Bell Dow 30 Quotes
• Credit Spreads and Libor Data
• US Futures and Pre-Market Data

Hong Kong shares gained 0.4 percent. Financial heavyweights HSBC and China Construction Bank led losses, while refiner Sinopec rose amid falling crude oil prices.

Singapore's Straits Times Index climbed 2.1 percent. Automotive distributor, Jardine Cycle & Carriage, which controls Indonesia's biggest automotive firm, fell 0.1 percent after strong election results in Southeast Asia's largest economy were seen boosting the market further.

Chinese stocks rose 1.4 percent as surprisingly high mainland new lending data for June stoked further worries of a likely clampdown on China's monetary easing policies. China's central bank on Wednesday said it would resume auctions of one-year bills in its weekly regular open market operations, in what traders said was another sign that monetary policy was being tightened slightly.

© 2009 CNBC.com