Asia stocks sharply lower as recession fears flare - KMOV.com

Asia stocks sharply lower as recession fears flare

BANGKOK (AP) -- Investors across the globe continued to dump stocks Friday as weak economic indicators from major nations including China intensified fears of a new recession.
  
In Asia, losses were broad-based but less severe than in the U.S. and Europe. Oil prices stabilized near $81 a barrel after diving to a near seven-week low on Thursday. The dollar was down against the yen and the euro.
  
Hong Kong's Hang Seng index fell 1.7 percent to 17,610.65 after losing nearly 5 percent the day before.
  
South Korean shares took a large hit, with the Kospi tumbling 4.2 percent to 1,724.92 amid worries over signs of weakness in China, Seoul's biggest trading partner. Japan's market was closed for a holiday.
  
Economic news was bad around the world. A closely watched survey in Europe indicated a recession could be on the way there, and a manufacturing survey suggested a slowdown in China, which has been one of the hottest economies. Employment figures in the U.S. remained weak.
  
"I think the most important thing is Europe and America are both entering into recession at the same time, and the governments failed to take decisive action to stop the decline," said Francis Lun, managing director of Lyncean Holdings Ltd. in Hong Kong. "Investors are disappointed and fear a global recession. So that's why investors are getting out of shares."
  
Lun also blamed "political squabbling" in the U.S. that is preventing President Barack Obama from spending the money needed to create a jobs program with real impact.
  
Meanwhile, Canada's finance minister had harsh words for Europe. On Thursday, he warned of a second financial meltdown on the scale of 2008 if Europe doesn't take decisive action to recapitalize its banks and deal with the Greek debt crisis.
  
"There's some justified frustration with respect to the lack of political decisiveness in Europe," Finance Minister Jim Flaherty said. "The markets are reacting."
 
Flaherty said Greece and other severely indebted nations must be made to follow through with austerity programs to bring down spending, and Europe must put up the billions of dollars that will be needed to ensure banks don't fail.
  
Elsewhere in Asia, Australia's S&P/ASX 200 fell 0.6 percent to 3,940.30 and China's Shanghai Composite Index dropped 1 percent to 2,418.59. Benchmarks in Singapore, Taiwan, Thailand, the Philippines and New Zealand were also lower.
  
In Hong Kong trade, Zijin Mining Group Co., China's biggest gold miner, fell 8.9 percent amid a price drop in the precious metal as investors sold gold to raise cash.
  
Stocks in Seoul slumped amid signs of weakness in China. Hyundai Heavy Industries Co., the world's biggest shipbuilder, slumped 6.6 percent. Hynix Semiconductor, the world's second-largest memory chip maker, fell 3.3 percent. Steel giant POSCO fell 6 percent.
  
A slowdown in China could also blunt demand for imported raw materials like iron ore. Australia's Fortescue Metals Group, a leading exporter of iron ore, plummeted 8.1 percent.
  
Energy shares were whipped by the tumble in oil prices. Australian oil and gas producer Woodside Petroleum Ltd. sank 2.3 percent. China National Offshore Oil Corp., known as CNOOC, fell 2.3 percent.
  
On Wall Street, the Dow Jones industrial average fell 3.5 percent to close at 10,733.83. It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown.
  
The Standard & Poor's 500 index, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3 percent for the day.
  
The Fed announced Wednesday that it would shuffle $400 billion of its own bond holdings in hopes of reducing interest rates on long-term loans, a plan known as Operation Twist. The central bank hopes that if people and businesses are able to borrow money more cheaply, they will spend throughout the economy and give it a lift.
  
Still, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees "significant downside risks to the economic outlook," including volatility in overseas markets.
  
Benchmark oil for November delivery was up 40 cents at $80.92 in electronic trading on the New York Mercantile Exchange. Crude plunged $5.41, or 6.3 percent, to settle at $80.51 on Thursday. That was its lowest point since Aug. 9.
  
In London, Brent crude for November delivery was up 58 cents at $106.07 on the ICE Futures exchange.
  
In currency trading, the euro rose to $1.3512 from $1.3469 late Thursday in New York. Earlier on Thursday, the euro fell to $1.3384 -- its lowest point since Jan. 18. The dollar slipped to 76.33 yen from 76.40 yen.

 

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