Asian shares posted broad-based losses on Wednesday, as reports quashing speculation of large-scale investment stimulus measures in China and the ECB's rejection of Spain's plan to recapitalize troubled lender Bankia through a 19 billion euro 'backdoor bailout' curbed appetite for risk.
Commodities such as crude and copper retreated more than a percent each, gold plummeted to a one-week low and the euro fell to its lowest level in two years against the dollar, as rising Spanish debt yields and concerns about the nation's ailing banking sector drove investors into assets perceived to be safe.
With a deepening banking crisis in Spain fueling risk aversion and pro-bailout parties retaining only a narrow lead in Greek opinion polls, investors now look forward to ECB chief Mario Draghi's speech later in the day and Friday's U.S. jobs as well as Chinese factory output data for near-term directional cues.
Japanese shares snapped a four-day rally, as weaker-than-expected U.S. consumer confidence data and a firmer yen against the euro amid the European debt crisis weighed on export-related shares. The Nikkei average pared some of its early loss to end down 0.3 percent, while the broader Topix index finished half a percent lower. Among euro-linked shares, Canon slid half a percent, Pioneer tumbled 2.9 percent, TDK dropped 1.6 percent and Fanuc shed 1.2 percent.
Olympus jumped 4 percent on a report that it is in separate talks with Sony and Panasonic for a possible business tie-up. Shares of Sony and Panasonic ended down 1.9 percent and 2.2 percent, respectively. Trading house Marubeni fell 3.7 percent following news of its proposed $3.6 billion acquisition of U.S. grain merchandiser Gavilon Group LLC. Embattled Renesas Electronics soared 27 percent on short covering after Morgan Stanley MUFG Securities upgraded the stock to "equal-weight" from "underweight."
China's Shanghai Composite index slipped 0.2 percent on concerns over faltering domestic growth after Chinese news agency Xinhua said there was no plan to introduce stimulus measures of the scale unleashed during the depths of the global financial crisis in 2008 to revive growth.
Hong Kong's Hang Seng index fell a whopping 1.9 percent, with Chinese railway companies bearing the brunt of the selling after recent gains. HSBC Holdings Plc, Europe's biggest bank, lost 2.8 percent after ECB Governing Council member Ewald Nowotny said the bank does not plan additional bond purchases to stem rising yields on euro area government securities.
Australian stocks pared early losses, but still ended firmly in the red on concerns over Spain and dwindling hopes for a large Chinese stimulus package. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index lost about half a percent each. Miners BHP Billiton, Rio Tinto, Fortescue and Newcrest fell between 0.6 percent and 2.3 percent after gold and copper prices fell in offshore markets, pressured by a downgrade of Spain's credit rating further into junk territory.
Financials ended mixed, with Commonwealth losing 0.3 percent and Westpac declining 0.6 percent, while ANZ and NAB posted modest gains. Investment bank Macquarie Group rose 0.7 percent after it acquired Wilmar International's 42.5 percent stake in the sugar tradehouse Czarnikow.
Retailer Woolworths shed 0.7 percent and Wesfarmer eased 0.2 percent after data showed retail sales in Australia declined a seasonally adjusted 0.2 percent from the previous month in April, with total turnover contracting for the first time in 2012.
In other economic news, the total value of construction work in the first quarter of 2012 rose a seasonally adjusted 5.5 percent compared to the previous three months, the Australian Bureau of Statistics said today, coming in at A$48.300 billion.
Seoul shares snapped a three-day winning streak, with growing worries over Spain and China's sluggish growth weighing on sentiment. Clawing back some initial losses, the benchmark Kospi ended the session down about 0.3 percent.
Economy-sensitive shipping shares led the losses, with STX Pan Ocean and Hyundai Merchant Marine falling 2-3 percent, while crude refiner S-Oil lost about a percent and builder Hyundai Engineering & Construction retreated 1.9 percent. Keystone Global slumped almost 15 percent on reports that it is acquiring a U.S.-based coal mine for $480 million.
New Zealand shares ended slightly higher, led by Mainfreight after the transport company posted record annual sales and earnings, driven by growth in New Zealand and Australian operations. Shares of the company climbed 3.2 percent, while the benchmark NZX-50 index edged up 0.1 percent.
Fletcher Building, the nation's largest construction company, edged up 0.2 percent, while building products maker Steel & Tube shed 0.9 percent after government data showed the pace of New Zealand residential building issuance slowed last month despite increased demand for new housing in Auckland.
Restaurant Brands, which operates the local Pizza Hut, KFC and Starbucks brands, lost 1.9 percent after the company reported a 2.7 percent fall in first-quarter sales. Gold miner OceanaGold tumbled 2.5 percent as gold dipped to a one-week low on a weaker euro.
Elsewhere, India's benchmark Sensex was last trading down 0.6 percent, Indonesia's Jakarta Composite slipped marginally, Singapore's Straits Times index was down 0.6 percent and the Taiwan Weighted average fell 1.1 percent, but Malaysia's KLSE Composite was up 0.6 percent.
On Wall Street, stocks saw considerable volatility before ending mostly higher overnight in reaction to mixed news out of Europe. Greek opinion polls gave shares a lift and speculation that China will announce another round of stimulus measures further underpinned sentiment, outweighing disappointing data on consumer confidence and the Dallas Fed activity index.
Gains were kept in check following news that Egan Jones downgraded Spain's credit rating to BB- from B. The Dow added a percent, the tech-heavy Nasdaq gained 1.2 percent and the S&P 500 ended up 1.1 percent.
by RTT Staff Writer
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