Asian Markets Close Down on Credit Worries

Asian stocks closed sharply lower Monday, pulled down by the financial sector, with fears that the credit crisis is still in full swing returning.

Japan and Australia both shed over 1 percent while South Korea ended a touch weaker.

Financial stocks sagged, extending their decline on worries about the credit market after U.S. financial giant Citigroup said it may suffer up to $11 billion in writedowns for subprime losses. Investors dumped bank counters, sending Japan's top bank Mitsubishi UFJ, Australia's newly listed Macquarie Group, South Korea's Kookmin Bank and Singapore's United Overseas Bank all sharply lower.

Citigroup's announcement comes amid increasing worries about the bank's exposure to the credit markets. The U.S. bank added that its chief executive Charles Prince had resigned, confirming earlier press reports and sending Citigroup's shares 5 percent up in their debud in Tokio.

The writedown is on top of the $6.5 billion that Citigroup wrote off three weeks ago for subprime mortgages, loan losses and other debt. This comes five days after Merrill Lynch ousted its own chief executive, Stanley O'Neal, following an $8.4 billion writedown.

The Nikkei 225 Average ended at a seven-week closing low, down 1.50 percent, hit by widenening credit fears. Selling of high-tech stocks such as Softbank, which was undercut by a ratings downgrade, also weighted on Tokyo shares, while Japanese political uncertainty made players reluctant to buy. 

South Korea's KOSPI closed 0.2 percent easier as lingering global credit worries hit banks such as Kookmin Bank after Citigroup said it might make massive write-downs for subprime losses.

Australian shares fell 1.7 percent to a two-week closing low as more negative news out of
credit markets put financial firms such as Macquarie Group and major banks under renewed pressure.

China's Shanghai Composite Index sank over 2 percent, led by financials, despite a spectacular debut by PetroChina, which nearly tripled on its first day of trade. China's biggest oil and gas producer, which will be the largest stock in Chinese indexes, soared 161 percent from its IPO price to end the morning at 43.65 yuan, far above analysts' expectations of around 35 yuan.

Hong Kong stocks closed 5 percent down in a broad selloff as China's proposal to allow mainlanders to invest directly in Hong Kong-listed securities looked set for further delays after cautionary comments by Premier Wen Jiabao. PetroChina and other recent highflyers in the energy sector were among the top large-cap losers in the morning, despite the spectacular listing by the oil producer in Shanghai.

Singapore's Straits Times Index closed 1.2 percent lower.