By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Chinese stocks fell for a seventh straight session Friday as worries about inflation and slowing growth restrained buyers, while Japanese shares declined on concern over the nation’s economic outlook and the yen’s strength against the U.S. dollar.
The two key markets defied broad regional gains, which came as bargain buyers circled back into stocks bruised in a selloff earlier in the week.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -3.25% rose 0.5% to 4,684.0, Hong Kong’s Hang Seng index /zigman2/quotes/210598030/delayed HK:HSI -2.42% added 1% to 23,118.07, Taiwan’s Taiex edged up 0.3% to 8,810.00, South Korea’s Kospi climbed 0.4% to 2,100.24 and, in afternoon trading, India’s Sensex /zigman2/quotes/210597966/delayed IN:1 -3.64% advanced 1.1% to 18,246.92.
The first four benchmarks ended the week with losses, and the Indian index also looked set for a similar downbeat weekly performance.
Asia’s Week Ahead
India's January to March gross domestic product will be in Asia’s spotlight next week, as will key reports on Chinese manufacturing and Japanese industrial output and employment data for April.
China’s Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -4.04% was the region’s worst performing benchmark index of the day and the week. It ended at 2,709.95, down 1% from the close on Thursday and 5.2% from its finish last Friday.
“The key theme I see now is the balance of risks between growth and inflation,” said RBS China economist Li Cui, adding that inflation is the bigger risk of the two.
In addition to inflationary pressures and an expected economic slowdown in the second half of the year, investors in China have also been fretting over a potential liquidity squeeze because of the launch of a new board for foreign company listings in future.
Huaneng Power International Inc. /zigman2/quotes/208446338/delayed CN:600011 -3.89% /zigman2/quotes/202495959/composite HNP -1.51% declined 3.3%, Minmetals Development Co. /zigman2/quotes/205489541/delayed CN:600058 -5.02% shed 4.1% and Zhongjin Gold Corp. /zigman2/quotes/207741711/delayed CN:600489 -5.37% fell 2.6%.
Shares of PetroChina Co. /zigman2/quotes/206980083/delayed CN:601857 -1.93% rose 0.8% after the company announced that parent China National Petroleum & Chemical has raised its stake in the firm by about 0.2% and planned to further increase its stake by up to 2.0%. In Hong Kong, the PetroChina /zigman2/quotes/205108732/composite PTR -1.66% /zigman2/quotes/204979431/delayed HK:857 -4.43% stock shot up 3.8%.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.67% fell 0.4% to 9,521.94.
Exporters were generally crimped by a firm yen against the U.S. dollar, while Sony Corp. /zigman2/quotes/208567357/composite SNE +2.15% /zigman2/quotes/201361720/delayed JP:6758 -3.87% was also hurt after reporting a loss for the full-year ended March 2011, largely because of the impact from the March 11 earthquake and tsunami.
Sony dropped 3.2%, while Honda Motor Co. /zigman2/quotes/207173990/composite HMC -1.00% /zigman2/quotes/200490352/delayed JP:7267 -4.26% gave up 0.8% and Nintendo Co. /zigman2/quotes/201616881/delayed NTDOY -1.32% declined 0.9%.
Economic data showing core consumer prices rose for the first time in more than two years also weighed on sentiment.
“The [consumer-price index] uptick came mostly from higher materials costs being passed on to consumers rather than an increase in demand,” and that could hurt consumer spending, said Hideyuki Ishiguro, a strategist at Okasan Securities.
Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.39% futures were down 9 points in screen trade.