Asian stocks fell sharply on Wednesday, with a flat closing on Wall Street overnight and softer commodity prices amid concerns that Greece may leave the euro zone contributing to the weakness.
Also, investors exercised caution ahead of an informal meeting of European leaders later in the day, where leaders are expected to discuss new measures to prop up growth, recapitalize faltering European banks and keep Greece in the 17-nation euro.
Meanwhile, citing weakness in China, the World Bank today cut its growth forecast for Asia and the Pacific in 2012 to 7.6 percent from 7.8 percent, and urged governments in the region to guard against inflation risks and boost domestic demand to offset weak exports due to a sluggish global economic recovery and Europe's debt crisis.
Commodities retreated and the euro weakened against the dollar after former Greek Prime Minister Lucas Papademos said the risk of Greece leaving the euro is a "real" threat. The Japanese yen strengthened against the dollar after the Bank of Japan kept monetary policy steady and refrained from adding monetary stimulus.
Japanese shares tumbled, with the Nikkei average falling almost 2 percent to a four-month low, as comments from the former Greek PM that Greece exit risk is "real" rekindled contagion worries. The broader Topix index shed 1.6 percent to end at a fresh 2012 low. Tech shares retreated sharply, with Tokyo Electron and TDK tumbling 3-5 percent after computer maker Dell reported a 33 percent fall in first-quarter net profit, missing estimates.
Renesas Electronics slumped 9 percent, reversing Tuesday's 7.4 percent rally after unveiling restructuring measures. Property developers lost ground as the Bank of Japan refrained from additional easing. Mitsui Fudosan, Mitsubishi Estate and Sumitomo Realty & Development lost 3-4 percent. Japan Tobacco bucked the downward trend to end 1.9 percent higher on defensive buying given the uncertain economic environment.
Chinese shares snapped two days of gains, with external downside risks such as Greece's possible exit from the euro zone and a slowing domestic economy weighing on sentiment. The benchmark Shanghai Composite eased 0.4 percent, while Hong Kong's Hang Seng index lost 1.3 percent.
Australian shares closed firmly in negative territory on concerns over slowing global growth after the World Bank lowered its growth forecast for China to 8.2 percent in 2012, down from 9.2 per cent in 2011 and 10.4 per cent in 2010. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended down about 1.3 percent each.
Department store Myer Holdings slumped almost 8 percent after the firm cut its full-year profit guidance, citing weak sales in the past six weeks. Other retailers followed suit, with David Jones, Wesfarmers and JB Hi-Fi falling 1-2 percent. Miners also lost heavily on nervousness over Europe's long-running debt crisis. BHP Billiton fell 1.2 percent, Rio Tinto lost a percent and smaller rival Fortescue tumbled 5 percent.
Iluka Resources fell 3.4 percent after the mineral sands miner backed away from earlier pledges to increase dividends despite confirming a decent increase in earnings in 2012. The big four banks lost 1-2 percent, oil & gas producer Woodside lost 1.3 percent, Santos shed 1.9 percent and Oil Search eased 0.6 percent. Fairfax ended unchanged after announcing changes to its board.
South Korea's Kospi average fell 1.1 percent, with large-cap blue chips bearing the brunt of the selling as caution set in ahead of the summit of euro zone leaders. Heavyweight Samsung Electronics fell 1.5 percent, while SK Hynix slumped 4.9 percent.
Hyundai Motor, South Korea's largest automaker, fell 1.5 percent, steelmaker Posco lost a percent and shipbuilder Hyundai Heavy tumbled 2.9 percent. LG International Corp bucked the downward trend to end 1.3 percent higher. The company in consortium with Hyundai Engineering bagged a $530 million order to build a refinery in Turkmenistan.
New Zealand shares weakened in line with other regional markets on concerns over the situation in Greece. The benchmark NZX-50 index shed 0.6 percent, with Telecom, the nation's largest phone company, leading the decliners with a 2.5 percent loss. Chorus, the network company spun off from Telecom last November, slid 1.6 percent on news that the company would spend nearly a billion dollars over the next two years in the roll out of its ultra-fast and rural broadband networks.
Fletcher Building, the nation's largest construction company, fell 1.3 percent and utility Contact Energy ended unchanged. Whiteware manufacturer Fisher & Paykel Appliances lost 1.8 percent ahead of its results tomorrow, while exporter Fisher & Paykel Healthcare, which reports its earnings on Friday, gained 1.2 percent. Children's clothing chain Pumpkin Patch led the gainers on the exchange, climbing 4.7 percent.
Elsewhere, India's benchmark Sensex was last trading down half a percent, Indonesia's Jakarta Composite was losing 1.3 percent, Malaysia's KLSE Composite fell half a percent, Singapore's Straits Times index was down 1.3 percent and the Taiwan Weighed average tumbled 1.8 percent.
On Wall Street, stocks ended flat overnight after trading with a positive bias for a major part of the session on the back of data showing an unexpectedly strong reading on existing home sales.
Buying interest eventually waned as investors digested Japan's credit rating downgrade and comments from the former Greek PM that preparations are being made for Greek exit from the euro. The tech-heavy Nasdaq slid 0.3 percent following a steep rally in the previous session and the Dow edged down marginally, while the S&P 500 gained 0.1 percent.
by RTT Staff Writer
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