Asian markets extended losses Tuesday, led by financial firms on renewed credit fears after the Wall Street Journal reported that Lehman Brothers may be headed for its first quarterly loss.
The Journal, citing sources familiar with the matter, said that Lehman Brothers may have to raise $3 billion to $4 billion in fresh capital, suggesting the bank could post its first quarterly loss since going public. New capital may be raised by issuing common shares, diluting existing shareholders, and would probably be announced in conjunction with its quarterly results due the week of June 16, the newspaper said.
The report also affected bonds and forex with the U.S. dollar giving up gains against the yen and safe-haven U.S. Treasuries rising.
Credit worries had already resurfaced in the morning session after ratings agency Standard & Poor's on Monday downgraded the debt ratings of three major U.S. investment banks, Wachovia ousted its chief executiveand British mortgage lender Bradford & Bingley warned of increased risks of default.
Tokyo's Nikkei 225 Average fell 1.6 percent, dragged down by Honda Motor and other exporters after the yen climbed against the dollar following the Journal's Lehman report. Construction firms fell after two were downgraded and shippers sank on profit-taking, weighing stocks down despite surges from battery-makers such as GS Yuasa after Japan Post said on Monday it was planning to switch its entire fleet of delivery vehicles to electric cars.