Asia-Pacific Markets

Asia Falls on Europe Debt Worries

CNBC with Wires

Asian equities were mostly lower on Tuesday, as lingering doubts about how Greece and other debt-laden euro zone countries will reduce their budget deficits put the brakes on the impressive relief rally in global stocks seen on Monday.

U.S. shares logged their biggest gains in over a year on Monday on the 1 trillion emergency-bailout package announced by the EU and the IMF, with the Dow Jones Industrials surging more than 400 points to notch its best gains in more than a year.

Japan's Nikkei average retreated 1.1 percent, as euphoria over a $1 trillion package to  prevent the spread of Europe's debt crisis dissipated and as Mizuho Financial fell on news of a big share offering.

Mizuho lost 4.7 percent to 163 yen after sources told Reuters that it plans to issue about $8.7 billion of shares to meet stricter capital requirements.

Sumitomo Mitsui Financial Group also tumbled as its affiliate consumer lender Promise slid after a loss warning while Toshiba Corp fell after unveiling capital spending plans that an analyst said raised the risk of a share offering.

In moderate trade, the benchmark Nikkei fell 119.60 points to 10,411.10, after earlier rising as much as 1.1 percent to 10,643.28. It erased most of the gains made the previous day when news of the European rescue package came during trading hours in Tokyo.

The broader Topix fell 1.3 percent to 932.10.

After the market close, Toyota Motor beat forecasts with a fourth-quarter profit as it cut costs and its aggressive sales incentives swiftly drew U.S. customers back to showrooms after its worst recall crisis.

But the automaker forecast a smaller-than-expected 90 percent rise in operating profit for the year to end-March 2011.

Prior to the news, the stock ended the day down 0.7 percent at 3,495 yen. Toyota came under new scrutiny on Monday from the U.S. government, which launched a probe into whether Toyota promptly notified safety regulators about a pickup truck recall for a steering system problem.

Shares of Promise tumbled 17.4 percent to 713 yen after the consumer lender warned it would likely fall back into the red this year, defying expectations for a small profit in a sign the industry may not be past the worst.   

Among other big consumer lenders, Acom dropped 7.6 percent to 1,284 yen and Takefuji Corp lost 6.4 percent to 335 yen.

Japan Steel Works shed 4.6 percent to 935 yen after it issued an operating profit forecast 21 percent below the previous year's result and just under a consensus estimate from Thomson Reuters I/B/E/S.

Toshiba ended down 4.4 percent at 495 yen after saying it would invest $14 billion over the next three years in its chip and nuclear power businesses.

Seoul shares gave up their earlier gains to close 0.44 percent lower on Tuesday as nagging doubts about the eurozone's fiscal health dampened investor sentiment, with declines led by key technology and banking issues.

The Korea Composite Stock Price Index (KOSPI) finished down 7.39 points at 1,670.24 points.

Doosan Group related issues fell amid market rumors the group may inject funds into its compact construction equipment unit Bobcat, with Doosan Corp dropping 7.59 percent and Doosan Heavy Industries losing 5.39 percent.

A group spokesman told Reuters the talk was "senseless" and that the group did not have capital injection plans for any its units.

Nuclear power-related stocks declined after local media reports said South Korea was not picked as the preferred bidder for a Jordanian nuclear power plant project.

Korea Electric Power Corp confirmed the report, and its shares lost 2.02 percent.

Korea Power Engineering Co, which designs nuclear power facilities, declined 2.96 percent while KR Plant Service & Engineering, which specialises in nuclear facility maintenance, shed 4.51 percent.

But auto issues outperformed, with Kia Motors ending up 1.71 percent to 29,800 won after hitting a fresh historical high of 30,150 won, and Hyundai Motor ending flat.

Shares in Samsung Electronics, Samsung Group's flagship firm, slipped after the group said on Tuesday it would invest 23.3 trillion won ($20.6 billion) by 2020 in new businesses including health are and green energy technology.   

Shares in Samsung Electronics, the world's No.1 memory chip maker, were down 0.65 percent, while Hynix Semiconductor, the world's No. 2, climbed 0.74 percent.

Australian stocks wiped out early gains to close 1.1 percent lower, as investors grew cautious about the cost and implementation of a massive package designed to prevent sovereign debt default in the euro zone.

The benchmark S&P/ASX 200 index was down 51.6 points at 4,548.0.

New Zealand's benchmark NZX 50 index rose 0.1 percent to 3,167.0 points.

Markets were also cautious after data showed Chinese inflation edging up to an 18-month high, keeping the prospect alive of policy tightening in Australia's largest trading partner.

Among global mining heavyweights, BHP Billiton fell 2.2 percent to A$38.13, while Rio Tinto lost 2.5 percent to A$67.10.

The four major banks all reversed early gains as relief over the European debt bailout gave way to nerves about how the money would be spent and how Greece would reduce its budget deficit.

Shares in rail and ports operator Asciano Group rose initially but ended down 0.9 percent to A$1.64, after the company said it would lodge a A$1.1 billion impairment charge, but this would not hurt its cashflow or outlook.

Hong Kong Slips, Shanghai Up

Hong Kong's benchmark Hang Seng Index declined 1.4 percent at 20,145.18 points while the China Enterprise Index of top locally listed mainland stocks was down 1.23 percent.
But the world's top contract maker cell phone maker Foxconn International surged 5.7 percent after  industry tracker NPD said strong sales of Droid phones manufactured by Motorola, a large Foxconn customer, helped Google's Android to become the second most popular software for smartphones in the United States behind Research in Motion.

Foxconn shares staged their sharpest rally since early January on heavy volume, up as much as 7 percent in early trade. Before Monday's gain, the stock had lost about a fifth of their  value over the past month.

Cathay Pacific climbed 1.6 percent after the  airline said it expected to see strong results for the first half  of 2010 on improved premium passenger and cargo revenues, despite  higher fuel prices.

Market heavyweight and Europe's biggest lender HSBC Holdings was down 1.8 percent after Monday's sharp rally as some concern surfaced over how debt-laden eurozone economies would reduce their budget deficits.

On Monday, HSBC rose by the most in more than nine months as European bank shares surged on the back of a $1 trillion euro debt plan.     

China's key stock index closed 1.9 percent down on Tuesday to its lowest in a year, reversing earlier gains as relief over the euro zone debt package faded and worries mounted over a worsening inflation outlook.

The Shanghai Composite Index fell as far as 2,638.5 points, its lowest close since May 27, 2009, after reversing a nearly 2 percent rise in early trade.

China's consumer price inflation edged up to an 18-month high of 2.8 percent in April and banks' new lending topped expectations, although overall monthly data showed the economy was not overheating.    

Analysts said the inflation figures had largely been priced into the market but inflation concerns were mounting, increasing the chances of an interest rate rise in the coming months.