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Asian Shares Fall On Spanish Woes, Growth Concerns

4/16/2012 5:39 AM ET

Asian stocks ended mostly lower on Monday, as worries over Spain's financial health and signs of slowing U.S. economic momentum added to concerns over the global economic outlook.

Data showing slackening private domestic demand and fixed asset investment in China, the world's second-largest economy, and the Bank of Korea's decision to cut its growth estimate for the year amid volatile oil prices and renewed worries about the euro zone debt crisis also sapped appetite for riskier assets.

Commodities extended losses and the euro dropped below $1.30 for the first time in two months as caution prevailed ahead of tomorrow's auction of Spanish Treasury bills and the sale of two-year and 10-year bonds on Thursday.

Japanese shares retreated as concerns over Europe's sovereign debt crisis and anxiety ahead of more U.S. data and earnings this week prompted investors to adopt a cautious stance. The Nikkei average fell 1.7 percent to fall back below the 9,500 mark, while the broader Topix index finished down 1.4 percent.

Banks bore the brunt of the selling, with Mitsubishi UFJ Financial Group and Mizuho Financial Group falling over 3 percent each, as U.S. financial giants Citigroup, Goldman Sachs Group and Bank of America report their first-quarter earnings this week.

The yen rose to a seven-week high against the dollar, prompting investors to take some profits in export-related shares. Canon, a camera maker that derives nearly 60 percent of its sales from Europe and the United States, fell 2.4 percent, while shares of high-tech manufacturer Kyocera tumbled 2.6 percent. Advantest slumped 6.1 percent and Tokyo Electron lost 2.9 percent.

Chinese shares ended largely unchanged, with the benchmark Shanghai Composite ending down a modest 0.1 percent, as the move by Chinese authorities to allow the yuan to move one percent either side of a state-set parity rate against the U.S. dollar raised hopes for more policy loosening.

Hong Kong's Hang Seng index ended 0.4 percent lower, mirroring declines in the U.S. and Europe Friday and in Asia this morning on concerns the global economic recovery is faltering.

Australian shares ended in the red, with both the benchmark S&P/ASX 200 and the broader All Ordinaries index losing around half a percent each, as rising borrowing costs in Spain rekindled worries about the region's debt crisis. BHP Billiton shed half a percent, while Rio Tinto and Fortescue Metals fell over a percent each, as investors awaited their quarterly production reports slated for release this week. Meanwhile, a media report indicated that private equity giant KKR is considering a move to buy and combine BHP Billiton and Rio Tinto's diamond businesses to create a multi-billion-dollar company.

In the financial sector, ANZ rose 0.6 percent after its unexpected small hike in lending rate last Friday increased pressure on the Reserve Bank of Australia to cut its official cash rate at its May board meeting. Commonwealth, Westpac and NAB ended down between 0.2 percent and 0.6 percent. Investment bank Macquarie Group shed 1.6 percent.

Linc Energy soared 18.7 percent after Hong Kong's Golden Concord agreed to buy a 5 percent stake in the company for $120 million, as part of a deal to create a joint venture to produce gas in China.

South Korea's Kospi average declined 0.8 percent, with financials pacing the declines on renewed worries over the euro zone's financial health. Hana Financial plunged 4.3 percent, KB Financial Group lost 2.2 percent and Woori Finance shed 2 percent.

Also weighing on investor sentiment to some extent, the Bank of Korea today lowered its 2012 economic growth outlook to 3.5 percent, from a December estimate of 3.7 percent, citing weaker-than-expected world economic growth and higher oil import prices. Korean Air Lines, South Korea's flagship carrier, slumped 4.8 percent on an analyst report that it may post a larger-than- expected operating loss of 92.5 billion won for the first quarter.

New Zealand shares fell modestly, joining a global slide after the cost of insuring Spanish debt hit an all-time high. The benchmark NZX-50 index shed 0.4 percent. Gold miner OceanaGold tumbled 3 percent as the precious metal extended losses on the back of the euro zone's debt woes. Retail stocks lost ground, with Hallenstein Glasson, Pumpkin Patch and Kathmandu Holdings ending down between 0.5 percent and 2.4 percent.

Vector, the electricity and gas network company, slumped 2.9 percent, rural services firm PGG Wrightson shed 2.6 percent, Chorus, Telecom's network arm spun off in November, fell a little over 2 percent and casino and hotel operator Sky City Entertainment lost 1.6 percent. Whiteware manufacturer and exporter Fisher & Paykel Appliances soared 4 percent as the kiwi dollar fell against the greenback.

Elsewhere, India's benchmark Sensex was last trading up 0.4 percent, led by banks, ahead of the Reserve Bank of India's monetary policy review slated for tomorrow. Indonesia's Jakarta Composite index was down 0.3 percent, Malaysia's KLSE Composite slipped 0.4 percent, Singapore's Straits Times index edged down marginally and the Taiwan Weighted average fell 0.8 percent.

On Wall Street, stocks moved sharply lower on Friday, with worries about slackening demand from China, negative reaction to quarterly results from JP Morgan and Wells Fargo and data showing an unexpected deterioration in U.S. consumer sentiment in April contributing to the weakness in the markets. The Dow slid 1.1 percent, the tech-heavy Nasdaq fell 1.5 percent and the S&P 500 shed 1.3 percent.

by RTT Staff Writer

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