Asian stocks tumbled Tuesday, but were off the morning session's lows, after falling commodity prices and a sharp drop on Wall Street spooked investors into taking profits and buying the yen on speculation the rapid pace of recovery may not be sustainable.
Questions about the extent of Chinese restocking of various commodities weighed on base metals prices and oil, with U.S. crude dropping below $67 a barrel, down $6 from an eight-month high reached on June 11.
The U.S. recession was widely viewed as ending sometime in the second half of 2009, but that has already been priced in, leading investors to trim positions into the end of the first half and wait for further confirmation.
The U.S. dollar dropped to the lowest since June 1, at 95.25 yen, down 0.7 percent. The Australian dollar was down 1 percent to 74.64 yen. Crude oil prices fell below $67 a barrel as fears over demand hit investor appetite.
Japan's Nikkei 225 Average finished down 2.8 percent as investors moved to unload riskier assets after they were rattled by falls in overseas markets and worry about the global economy. Mitsubishi and other resource-linked shares took a battering as oil fell below $67 and copper extended losses on fears about slowing demand, while exporters fell as the yen advanced against the dollar.
South Korea's KOSPI also ended 2.8 percent lower as renewed economic worries pressured commodities and energy-related issues, including POSCO and SK Energy, while banks also retreated on a weaker won.
Australian shares closed down 3.1 percent, their lowest close in four weeks, as investors fretted about the strength of a world economic recovery, selling mining stocks such as BHP Billiton, down 4.1 percent.
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Hong Kong shares retreated 2.9 percent in a broad-based slump spurred by lower energy and metals prices and a steep drop on Wall Street overnight over doubts about the pace of economic recovery. Scandal-tainted Chinese electronics retailer GOME jumped over 68 percent as it emerged out of a seven-month trading suspension after announcing a major capital raising moveand signed on U.S. private equity firm Bain Capital as a new investor.
Singapore's Straits Times Index was down 1.8 percent. Neptune Orient Lines retreated from earlier losses to trade 1.4 percent higher after it said it carried 21 percent fewer containers in the four weeks to May 29 versus a year ago.
China's Shanghai Composite Index fell 0.1 percent, mildly outperforming other Asian markets,
pulling back after scaling an 11-month closing high in the previous session. The premium gap between yuan-denominated A-shares and their Hong Kong-listed H-share counterparts rose above 42 percent for the first time in over two months. Financial shares were weak after leading Monday's gains. CITIC Securities sank after saying the National Audit Office had found violations in related operations including the company itself and its parent. CITIC said the investigation would not affect earnings.