By Shri Navaratnam And V. Phani Kumar
Stocks in Tokyo fell a day after Standard & Poor's cut the country's sovereign-debt rating, while Indian shares stumbled for the third consecutive session over interest-rate concerns.
Weak earnings reports from frontline companies such as Canon /zigman2/quotes/210242912/composite CAJ +3.14% and Kia Motors also weighed on sentiment. Meanwhile, Cnooc plunged 7% in Hong Kong after the offshore oil and gas producer set a production growth target for this year that disappointed investors.
"Expectations were quite high for earnings, so we are starting to see a gap [between expectations and results] with most companies also cautious about their outlooks," said Naoteru Teraoka , general manager at Chuo Mitsui Asset Management.
In Tokyo, the Nikkei Stock Average dropped 1.1% to 10360.34, pressured after ratings firm Standard & Poor's cut the country's longterm credit rating to double-A-minus from double-A, citing high debt levels.
Financial shares dropped on concerns the downgrade will hurt investor sentiment toward banks, which are big holders of Japanese government bonds. Mizuho Financial Group lost 1.2% and Mitsubishi UFJ Financial Group shed 2.7%.
The focus now shifts to the Japanese parliament, where the government is facing an uphill battle to implement budget and tax reforms — issues cited by S&P in cutting Japan's debt rating, said Yuichiro Harada , senior dealer at Mizuho Corporate Bank in Tokyo.
The Nikkei also was dragged down by a 3.1% fall in Canon after the company reported a 12% fall in its net profit for the October-December quarter due to higher sales promotion costs and lower prices of compact cameras.
Also pressuring the market, NEC /zigman2/quotes/205173342/delayed JP:6701 -3.14% tumbled 4.5% after posting a wider loss in the fiscal third quarter, while Advantest skidded 7.4% on a disappointing outlook.
In South Korea, the Kospi slipped 0.3% to 2107.87, its first loss of the week. That still left it with a 1.8% climb for the five-day stretch. Automobile and shipbuilding stocks led the fall. Kia Motors fell 3% after the auto maker reported a lower-than-expected 4.6% increase in fourth-quarter net profit.
Hynix Semiconductor jumped 5.4% after providing an upbeat outlook despite reporting an 83% on-year fall in fourth-quarter net earnings on Thursday.
Interest-rate sensitive stocks came under heavy selling pressure in Mumbai on worries rising interest rates would hurt consumer demand. The 30-share Sensitive Index dropped 1.5% to 18395.97, bringing losses for the last three sessions to 3.9%. The market has been falling in the wake of Tuesday's interest-rate increase and warning on inflation, with a day off for the Republic Day holiday on Wednesday.
Shares of tractor- and utility-vehicle major Mahindra & Mahindra tumbled 4.9% and Tata Motors sank 4.1%, while property firm DLF /zigman2/quotes/205643772/delayed CN:000002 +1.49% slumped 7%.
Elsewhere, Australia's S&P/ASX 200 gave up 0.6% to 4774.89 and Hong Kong's Hang Seng index declined 0.7% to 23617.02, its sixth loss in seven sessions. China's Shanghai Composite edged up 0.1% to 2752.75. Taiwan's Taiex added 0.5% to 9145.35 ahead of holidays that will keep it closed until Feb. 8. Many Asian markets will close late next week for the Lunar New Year holidays.
Several of the region's resource-sector shares declined after crude oil and gold prices ended on a weak note overnight. BHP Billiton /zigman2/quotes/208108397/composite BHP -0.94% fell 1.1% and Newcrest Mining /zigman2/quotes/203840223/delayed AU:NCM -3.58% tumbled 3.6% in Sydney, while Zijin Mining Group /zigman2/quotes/203833875/delayed CN:601899 -3.18% fell 1.6% in Hong Kong.
In Sydney, Energy Resources of Australia /zigman2/quotes/202164166/delayed AU:ERA +3.03% slumped 13% after it scrapped its final dividend and reported a 2010 net profit that came in at the bottom end of its recently delivered guidance.
Write to Shri Navaratnam at firstname.lastname@example.org