Asian Market Slide on Fukuda Exit, Thai Emergency

Asian markets extended losses in late trade Tuesday with Japan finishing at a 5-month low in the wake of its prime minister's sudden resignation. A state of emergency declared by Thailand also weighed on regional stocks.

Oil prices pushed lower towards $111 after Hurricane Gustav eased before slamming into the U.S. Gulf Coast, pushing up the U.S. dollar to a 7-month high against the euro and causing a broad selloff of commodities.

Japan's Nikkei 225 Average fell 1.8 percent to a five-month closing low, with energy shares such as oil and gas field developer Inpex Holdings plunging on a sharp fall in oil prices. For most of the day, the market moved in a narrow range. It showed little reaction to Prime Minister Fukuda's abrupt resignation as investors were still grappling with its implication. But it took a dive in the final hour of the session, triggered by index future trades. Market participants said their impact was exaggerated by thin trade and nervousness about the reaction from overseas investors to Japan's political confusion.

Seoul shares dropped half a percent to post their lowest close in 18 months as foreign investors continued to bail out of the market. Most financials retreated after state-owned Korea Development Bank confirmed that it was in talks over a possible consortium investment in troubled U.S. bank Lehman.Hana Financial Group and Woori Finance Holdings both declined.

Australian shares finished little changed, with weakness in the big miners on lower metals prices offsetting gains for top banks on a well-flagged domestic interest rate cut.

Hong Kong shares gained 0.7 percent, despite early declines as offshore oil producer CNOOC fell after speculation that a weaker-than-expected Hurricane Gustav would not lead to supply disruption. CNOOC shares closed 5.2 percent lower. Retreating oil prices drove up the U.S. dollar, reducing the safe haven appeal of bullion. Gold miner Zijin Moning fell over 6 percent to a one week low, while Lingbao Gold also fell.

Singapore's Straits Times Index closed 1.7 percent higher after a late-session rally. Shares of Cosco Corporation fell after Morgan Stanley downgraded the shipping firm to "equal-weight" from "overweight" citing lower estimated earnings from 2008 to 2010.

Thai stocks fell as investors sold big-cap energy and bank stocks after the primeminister declared a state of emergency.

China's Shanghai Composite Index fell 0.9 percent in tiny trade, as investors continued to worry about slowing economic growth and heavy supplies of fresh equity.