By Shri Navaratnam And Puja Rajeev
Chinese stocks extended their heavy losses on continued worries that Beijing may unveil more measures to tame restrain prices.
Dow Drops on China Pressure
European Stocks Sneak Higher
Hong Kong's Hang Seng Index declined 2% to 23214.46, its sixth loss in seven sessions and its biggest one-day drop since late June. China's Shanghai Composite shed 1.9% to 2838.86, adding to Tuesday's 4% slide. It closed at its lowest level since Oct. 11.
A weakened yen pushed Japanese exporters higher, as the Nikkei Stock Average edged up 0.1% to 9811.66.
Markets in Malaysia, Singapore, Indonesia and India were closed for a public holiday.
Commodity-linked shares were hit across the region as worries about the heavy debt load of some European nations reined in investors's interest in riskier assets and pushed the U.S. dollar higher against major global currencies. Copper, zinc, natural rubber and aluminum futures fell sharply on the Shanghai Futures Exchange.
In Australia, the S&P/ASX 200 lost 1.6% to 4624.25, a four-week low. BHP Billiton (NYS:BHP) dropped 2.2% and Rio Tinto (NYS:RIO) sank 3.2%. Among other materials plays, Mitsubishi Materials (TKS:JP:5711) lost 4% in Tokyo and Korea Zinc lost 2.9% in Seoul. Jiangxi Copper tumbled 8.2% in Hong Kong and 2.9% in Shanghai, while PetroChina (HKG:HK:857) skidded 3.2% in Hong Kong and 1.9% in Shanghai.
Selling continued on worries that Beijing could impose price controls, after the state-run Xinhua news agency cited Premier Wen Jiabao as saying China's Cabinet was drafting measures to curtain sharp increases in prices of commodities that affect people's immediate interests.
In Hong Kong, newly listed Shirble Department Store Holdings fell 18% on its first day of trading, pressured by poor broad market conditions.
Macau gaming stocks tumbled after the city's Chief Executive Fernando Chui said the local government will enhance the regulation of the gaming industry. Shares of Sands China (HKG:HK:1928) tumbled 7.1%, SJM Holdings (HKG:HK:880) gave up 6.3% and Wynn Macau (HKG:HK:1128) lost 4%.
"While some investors immediately interpret it as tightening, we consider this is always consistent with current practice of the government. In fact, the exact same sentence also appeared in last year's policy address and at the end, the sector has grown 60% year-to-day in 2010," J.P. Morgan analysts wrote in a note to clients.
In Tokyo, Mazda Motor (TKS:JP:7261) climbed 3.1%, after the Nikkei reported that about 10 firms have decided to buy a large portion of Ford Motor (NYS:F) 's 11% stake in the Japanese auto maker.
In Sydney, Qantas Airways (ASX:AU:QAN) lost 2.2% as concerns persist about the airline's technical issues. On Tuesday, a 747 jet en route to Argentina was forced to return to Sydney after problems with the aircraft's electrical system, the latest in a string of mid-air incidents which have plagued the carrier in recent weeks.
In Seoul, Tuesday's news that Hyundai Group was chosen as the preferred bidder for a controlling stake in Hyundai Engineering & Construction continued to weigh on some stocks, as investors worried Hyundai Group will have to borrow heavily for the acquisition. Hyundai Engineering & Construction lost 4.8% and Hyundai Merchant Marine—an affiliate of Hyundai Group—stumbled 9.6%.
Hyundai Motor, which lost out to Hyundai Group as the preferred bidder, rose 2.8%, on relief that the distraction of the bidding process was now over.
In foreign-exchange markets, the euro rose against the U.S. dollar after falling to a seven-week low of $1.3446 on Tuesday, amid simmering euro-zone debt worries. Investors remained focused on fiscally strapped Ireland, as speculation mounted that Dublin would request a bailout, even though Irish officials continued to deny that they would.
In late Asian trading, the euro fetched $1.3502 from $1.3489 late Tuesday in New York, and 112.61 yen from 112.36 yen. The dollar was buying 83.42 yen, from 83.30 yen.
Japanese bond yields rose; the benchmark 10-year yield added 0.025 percentage point to 1.05%.
Spot gold was at $1,332.60 per troy ounce, down $6.80 from the New York close on Tuesday. December Nymex crude-oil futures gave up 85 cents at $81.49 per barrel on Globex.
Write to Shri Navaratnam at firstname.lastname@example.org