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Asian shares dragged down by Wall Street fall

Asian shares dragged down by Wall Street fall

May 12th, 2011 by PAMELA SAMPSON, AP Business Writer in News

BANGKOK (AP) - A slide on Wall Street sparked by tumbling demand for oil and fears of slackening growth in the U.S. pulled Asian shares down Thursday.

Oil prices rose to near $100 a barrel, continuing two weeks of volatile sea-saw trading. The dollar was up against the yen but down against the euro.

Japan's Nikkei 225 index dropped 0.9 percent to 9,778.39 and South Korea's Kospi slid 1.2 percent to 2,140.20. Hong Kong's Hang Seng lost 0.8 percent at 23,098.76. Australia's S&P/ASX 200 was off 1.3 percent at 4,717.70. Benchmarks in Singapore and Indonesia were also lower, while those in Taiwan and Malaysia rose.

Toyota Motor Corp., the world's largest automaker, jumped 3.7 percent a day after the company said its efforts to restore full production after a devastating earthquake and tsunami on March 11 were going better than expected.

But a strengthening yen hurt other exporters. Sony Corp. lost 1.4 percent and Canon Inc. was off 0.9 percent. Panasonic Inc. and Sharp Corp. both slipped 0.8 percent.

Energy shares suffered declines after crude oil fell 4 percent to below $100 a barrel Wednesday. Inpex Corp., Japan's largest energy explorer, drooped 3.1 percent. PetroChina Co. Ltd., the publicly traded unit of China's biggest oil and gas company, lost 1.5 percent. BHP Billiton Ltd., the world's biggest mining company, fell 2.4 percent after prices of metals used in manufacturing, like copper, sank.

Mainland Chinese markets were lower a day after the country's national statistics bureau released figures showing inflation had eased slightly but still remained higher than expected. That caused investors to fret over the likelihood of further monetary tightening.

The Shanghai Composite Index dropped 0.4 percent to 2,873.18, while the smaller Shenzhen Composite Index dipped marginally to 1,211.30.

"Investors are worried the economy may slow further. The market will likely remain unstable, but the room for losses is rather limited in the short run," said Liu Jun, deputy index investment officer at Huatai Pinebridge Fund Management Co. in Shanghai.

The latest inflation figures could lead the central bank to keep controls on lending and liquidity - resulting in less money to put into stocks - and could put pressure on China to allow the yuan to appreciate. That would make Chinese goods more expensive, thus dampen demand for them and lead to falling prices.

"The latest set of economic figures suggests the exchange rate will remain under pressure to appreciate and interest rates will continue to rise," DBS Bank Ltd. in Singapore said in a report.

The yuan, also known as the renminbi or people's money, has risen by about 5 percent against the U.S. dollar since Beijing promised greater flexibility last June. Washington and other critics say an undervalued yuan swells China's trade surplus and hurts foreign companies.

In the U.S., demand for gasoline fell by the largest amount in seven weeks, the Energy Information Administration said Wednesday, a signal that consumers are conserving money. A drop in consumer and business spending could hurt corporate earnings and halt a rally that has sent U.S. stock markets up 7 percent this year.

The fall in demand for gas means that traders will take a close look at Thursday's weekly report on first-time applications for unemployment benefits. If they rise, that could indicate companies are cutting back in other areas as well.

Wall Street fell broadly, a sign of uncertainty about the U.S. economic recovery. The Dow lost 1 percent to close at 12,630.03. The S&P 500 fell 1.1 percent to 1,342.08. The Nasdaq composite lost 0.9 percent to 2,845.06.

Benchmark crude for June delivery was up $1.07 to $99.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $5.67 to settle at $98.21 per barrel on Wednesday.

In currencies, the euro gained to $1.4228 from $1.4196 late Wednesday. It was worth more than $1.49 just one week ago. The greenback rose to 81.16 yen from 80.97 yen.