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Asian Stocks Fall as Euro Worries Linger

CNBC.com with Reuters
Thursday, 20 May 2010 | 3:22 AM ET

Asian markets lost ground, with Tokyo, Seoul and Sydney down more than 1.5 percent each, as political divisions in Europe and fears of more market regulation kept investors nervous and pressured stocks.

Japan's Nikkei averageclosed at a three-month low, after briefly dropping below 10,000, as the euro's retreat from a rebound dragged on shares of exporters.

The benchmark Nikkei shed 1.5 percent to 10,030.31, its lowest finish since February 15. It earlier briefly touched 9,999.59.

The broader Topix fell 1.4 percent to 898.15 yen.

But ResonaHoldings surged nearly 9 percent at one point before paring gains, after the Nikkei business daily said Japan's fourth-largest bank plans to buy back and retire about $4.4 billion worth of preferred shares held by the government as early as this summer. Traders took that as a positive sign that the bank's relationship with the government is normalizing.

Tokyo market players said the direct market impact of Germany's move to ban naked short-selling in some securities was ebbing.

Data showing Japan's economy grew 1.2 percent in the first quarter, the biggest expansion in three quarters and one buoyed by robust exports to Asia and a stimulus-fuelled recovery in consumption, failed to push the Nikkei higher.

"The economy is steadily recovering but is heavily dependent on exports," said Masami Adachi, senior economist at JPMorgan Securities Japan.

"So a slowdown is inevitable unless domestic demand gains strength, as exports may be indirectly affected by debt problems in Europe which are certain to slow the region's growth."

Canon fell 2.6 percent to 3,825 yen and Honda Motor shed 2.9 percent to 2,896 yen. Chip tester maker Advantest slipped 2.8 percent to 2,420 yen.

Toyota Motor was down 2.5 percent at 3,420 yen after news that the automaker will voluntarily fix 22,300 units of the Passo small car in Japan due to the possibility of the engine stalling.

Seoul Drops 1.8%

Seoul shares fell for the fourth consecutive session to mark its weakest closing in nearly three months, as foreign selling hammered tech firms and shipbuilders amid fragile sentiment over
Europe's financial woes.

Investigation results that point to a North Korean submarine torpedoing one of the South's warship was widely expected, but concerns about escalating tension on the peninsula blocked an early attempt by the market to rebound.

The Korea Composite Stock Price Index finished down 1.83 percent at1,600.18 points.

With the market closing on Friday for a public holiday, the index declined 5.6 percent for the week.

Samsung Electronics fell 1.16 percent and LG Display shed 2.58 percent.

Hyundai Mipo Dockyard slid 3.73 percent after it said late Wednesday some previous ship orders had been downsized on requests from shipping firms. Daewoo Shipbuilding & Marine Engineering fell 1.9 percent.

Australia Dips Amid Caution

Australian stocks slid 1.6 percent to a fresh nine-month low, as hedge funds whittled down risk on their books, dumping the Aussie dollar and ditching their bets on takeover plays.

Investors shifted into defensive plays, especially those with offshore holdings, like blood products and vaccines maker CSL, which went against the tide, rising 1.8 percent.

The benchmark S&P/ASX 200ended down 70.6 points at 4,316.5. The market has dropped 6.4 percent so far this week.

New Zealand's benchmark NZX 50 index lost 10.5 points to close at 3,111.4.

The market has been under pressure this week on growing worries that global growth will be tepid as long as European governments are forced to cut back spending and Australian miners will suffer under a hefty new mining tax.

The big four banks led the way down, with Westpac Banking Corp shedding 2.4 percent and Commonwealth Bank of Australia off by 1.7 percent.

Global miner BHP Billiton stemmed the market's losses, rising 0.4 percent, while rival Rio Tinto slipped 0.8 percent.

Private hospitals operator Healthscope jumped 3.1 percent to A$5.34 after private equity groups TPG and Carlyle raised their takeover offer to A$1.8 billion ($1.5 billion), or A$5.75 a share.

Shares of Macarthur Coal continued to trend lower, declining 5.3 percent to A$10.40 two days after suitor Peabody Energy walked away from its bid for the Australian miner.

Acer Shares Outperform

Taiwan stocks declined 1.78 percent to a nearly three-month low due to ongoing risk aversion prompted by the euro zone crisis.

But Acer outperformed the broader market. The world's No. 2 PC brand jumped 1.6 percent on news it would raise prices in Europe to offset the effects of a tumbling euro currency.

The main TAIEX share index ended down 134.73 points at 7,424.43, the lowest close since Feb. 26.

The electronics sub-index fell 1.6 percent and the financial sector dropped 2 percent.

HK, Shanghai in The Red

Hong Kong stocks fell more than 1 percent to a 10-month intraday low on continued worries about an economic slowdown in the euro zone and fears of new measures in China to cool its red-hot property sector.

The benchmark Hang Seng Index was down 1.1 percent at 19,355, its weakest level since July and breaching a support level that may spur further selling.

Property plays were worst hit, with CITIC Pacific plunging over 6 percent.

China Unicom fell 2.3 percent after the country's No. 2 mobile operator said it added a lower-than-expected 681,000 3G mobile users in April.

The company had previously said it wants to add 10 million 3G users with monthly spending of more than 100 yuan this year.

ITC Properties rose more than 4 percent to its highest level in over a month after it said it was aiming to sell 94 million shares at HK$1.60 each to raise some HK$146 million for working capital and to fund business development.

Top Chinese oil firms CNOOC and Sinopec both rose about 2 percent after U.S. crude rose to around $71 a barrel.

China's key stock index finished 1.2 percent lower, dragged down by falls in banks and property issues as investors stayed wary over further possible tightening measures aimed at the country's red-hot property sector.

The Shanghai Composite Index ended the session at 2,555.9 points, extending Wednesday's 0.3 percent slip as worries about further measures to clamp down on the property market weighed on sentiment.

The index has been one of the worst performers in Asia this year, tumbling 22 percent in large part because of harsh government steps to rein in property prices. The sell-off has defied a solid recovery in the world's third-largest economy and strong corporate earnings.

Almost all 14 banks listed on the Shanghai and Shenzhen stock exchanges fell.

But Industrial & Commercial Bank of China, China's biggest lender and the world's most valuable bank, rose 0.5 percent and was the third-most actively traded stock on the Shanghai market.