Asian stocks fall as Europe anxieties flare again

September 29, 2011 • Business

FILE – In this Sept. 23, 2011 file photo, a specialist works at the New York Stock Exchange, in New York. Hopes that policymakers are preparing a grand plan to finally contain Europe’s debt crisis bolstered stocks Tuesday, Sept. 27, 2011, ahead of a meeting between the leaders of Greece and Germany. (AP Photo/Mark Lennihan, File)

BANGKOK (AP) — Asian shares were mostly lower Thursday as investors again began to doubt Europe’s ability to cauterize its worsening debt crisis.

Benchmark oil hovered above $81 a barrel while the dollar dropped against the euro but was steady against the yen.

Japan’s Nikkei 225 index shed 0.2 percent to 8,602.96 and Australia’s S&P/ASX 200 fell 1.2 percent to 3,989.70. Markets in Hong Kong were closed due to an approaching typhoon.

Mainland China’s Shanghai Composite Index lost 0.5 percent to 2,380.34 and the smaller Shenzhen Composite Index dropped 1.5 percent to 1,016.63.

But South Korea’s Kospi rose 1.8 percent to 1,753.52. Benchmarks in Malaysia, Taiwan, Indonesia and the Philippines were also higher while India and Singapore were [auth] down.

Investment sentiment was dented after German Chancellor Angela Merkel late Wednesday suggested that a second bailout package for Greece might have to be renegotiated. Several European leaders want banks to take bigger losses on Greek bonds. France and the European Central Bank oppose the idea.

Earlier this week, financial stocks were buoyed by hopes that a plan was in the works to prevent Greece from defaulting on its debts — an event that some fear would crush banks with significant holdings of the country’s bonds and cause domino-style defaults in other indebted countries such as Italy.

“One of these days, they will manage to get something onto paper. But at the moment, it feels like a big swinging match,” said Ben Potter, market strategist at IG Markets in Melbourne. “Markets always sell off further than they should and snap back further than they should.”

“I think people sort of have fallen into the trap of thinking, ‘The market is rallying, so something good must be happening,'” he said.

Raw materials companies were among the biggest decliners in Asia after prices for commodities like copper and oil fell sharply. Investors fear that Europe’s problems could cause the global economy to slip into another recession, weakening demand for basic materials.

Japanese energy explorer Inpex dropped 1 percent. Nippon Steel fell 3.5 percent. In Australia, mining giants BHP Billiton fell 2.1 percent while Rio Tinto lost 3.3 percent. Newcrest Mining Ltd., the country’s biggest gold miner, fell 2.9 percent.

But technology companies fared better, following on the heels of U.S. tech shares.

South Korea’s LG Electronics soared 12 percent and Samsung Electronics, the world’s top global manufacturer of flat screen televisions, memory chips and liquid crystal displays, rose 4.1 percent. Hynix Semiconductor Inc. gained 5.4 percent.

Shares of POSCO, South Korea’s leading steelmaker, rose 2.2 percent as the company announced the start of work on a cold-rolled stainless steel plant in Turkey, Yonhap news agency said.

Tokyo Electric Power Co., meanwhile, tumbled 12.17 percent following Japanese media reports that a government panel has estimated that compensation payments related to a nuclear leak following the March earthquake and tsunami disaster could reach as high as 5 trillion yen.

On Wall Street on Wednesday, the Dow Jones industrial average fell 1.6 percent to close at 11,010.90. The Standard & Poor’s 500 index fell 2.1 percent to 1,151.06. The Nasdaq composite index fell 2.2 percent to 2,491.58

The decline followed three days of gains. Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems. The Dow soared 272 points on Monday, its fourth-largest increase this year, and another 147 points on Tuesday.

Benchmark crude for November delivery rose 3 cents to $81.24 per barrel on the New York Mercantile Exchange. The contract fell $3.24, nearly 4 percent, to $81.21 per barrel on the Nymex on Wednesday.

Oil rose sharply earlier this week on optimism Europe was getting a better handle on its debt crisis.

In currencies, the euro rose to $1.3617 from $1.3582 late Wednesday in New York. The dollar was unchanged at 76.53 yen.

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