Asian Markets Fall as Swine Flu Worries Deepen

Asian stocks slipped for a second session Tuesday on worries about the potential economic fallout from the swine virus outbreak, even as investor reaction remained limited due to uncertainty about the full impact.

  • Asian Firms Restrict Travel, Advise Staff on Flu Fears

More countries have reported cases of the flu, and countries such as Australia and South Korea were testing for the virus. The World Health Organization raised its alert levelto be a step closer to declaring the first flu pandemic in 40 years. But so far the deaths have not spread beyond Mexico, where the outbreak began and 149 people have died, reportedly from swine flu.

Companies such as drugmakers and producers of face masks got a boost on an expected increase in demand, while airlines extended losses on worries the swine flu will cause a sharp reduction in travel around the world. Japan's Chugai Pharmaceutical, maker of influenza drug Tamiflu, rose 4.3 percent. Hong Kong's Cathay Pacific Airways dropped 2.3 percent.

Market players cut back on holdings of riskier higher-yielding currencies and commodities for a second day, taking profits on winning bets since the beginning of March that a global economic recovery was taking root. The Australian and New Zealand dollars -- still among the highest-yielding of major currencies -- hit one-month lows against the yen as investors cut back on traditional plays favoring carry trades that were in vogue as stocks rallied. The U.S. dollar weakened against the yen and the euro while oil futures fell below $50 a barrel on worries the outbreak could hurt air travel and the world economy generally.

Japan's Nikkei 225 Average fell 2.7 percent to its lowest close in almost a month, as the yen surged on a report that regulators have told Bank of America and Citigroup they may need to raise more capital. Sharp tumbled 8.8 percent after posting its second straight quarter of losses and Nippon Steel fell 5.2 percent after swinging to a fourth-quarter loss and forecasting no profit this financial year.

South Korea's KOSPI ended nearly 3 percent lower led by techs and financials after a Wall Street report that U.S. regulators were pushing two major banks to raise more capital, prompting investors to book profits amid renewed worries about the sector.

Australian shares closed down 0.6 percent, dragged lower in choppy trading by a slide in banks after top lender National Australia Bank reported a blow-out in bad debts.

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Hong Kong shares reversed early gains, down 1.9 percent as fears about the economic impact of a possible global spread of a swine flu outbreak triggered fresh selling. Shanghai Electric Group plunged 18 percent after China's top power equipment maker reported a 17 percent decline in its first quarter earnings. The stock, which was suspended on April 20, resumed trade after the company said it planned to issue up to 700 million A-shares for 5 billion yuan ($732.7 million) to fund its projects and repay bank loans.

Singapore's Straits Times Index was down 0.6 percent. Shares of Neptune Orient Lines, the world's seventh-biggest container shipper, fell 9.4 percent after the company reported a drop in its container volume.

China's Shanghai Composite Index slipped 0.2 percent in shrinking turnover, as worries about weak earnings and a possible global swine flu pandemic hit heavily weighted stocks although pharmaceutical stocks rose for a second day.