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Weak economic signals steer Asia down

Weak economic signals steer Asia down

May 15th, 2011 by PAMELA SAMPSON, AP Business Writer in News

BANGKOK (AP) - A loss of momentum on Wall Street, dropping commodity prices and worries over Europe's debt problems caused Asian stock markets to sag Monday.

Oil prices fell below $99 a barrel as crude became more expensive for investors with other currencies amid gains in the U.S. dollar.

Doubts about the strength of the U.S. economic recovery have weighed on Wall Street and markets elsewhere recently. After sailing through their best first quarter since 1998, U.S. stocks are starting to lose some momentum.

The Standard and Poor's 500 stock index, a broad market benchmark, is up just 1 percent this quarter after jumping 5.4 percent in the first three months of the year. That weaker performance is in large part because of conflicting data about the health of the U.S. economy.

Sluggishness on Wall Street was a sign that "investors continued to worry about slowing global growth and European debt concerns," said Ben Potter of IG Markets in Melbourne.

Meanwhile, the arrest Saturday in New York of International Monetary Fund head Dominique Strauss-Kahn on attempted rape charges was unlikely to directly affect Asian markets.

But the incident might prove a distraction in Europe, where the the IMF and Strauss-Kahn have been heavily involved in trying to resolve debt crises in countries such as Portugal and Greece, said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

Japan's Nikkei 225 index dropped 0.9 percent to 9,560.46 with banking shares incurring losses following comments last week by Chief Cabinet Secretary Yukio Edano suggesting that Tokyo Electric Power Co. will need help repaying its debts. Mitsubishi UFJ Financial Group Inc. lost 1 percent. Mizuho Financial Group and Sumitomo Mitsui Financial Group Inc. both lost 1.5 percent.

Edano said Friday that TEPCO may need adjustments to its loans to help it cope with financial losses incurred following twin natural disasters on March 11 - an earthquake and subsequent tsunami that smashed into one of the company's nuclear plants in northeastern Japan.

The utility has been struggling for two months to bring a radiation leak from the crippled Fukushima Dai-ichi plant under control. TEPCO has sought a 2 trillion yen ($24.8 billion) loan to tide it through the initial emergency period. It also expects to pay 50 billion yen ($620 million) in initial compensation to nearly 80,000 residents evacuated from around the plant. Overall damages are expected to be much higher.

South Korea's Kospi lost 0.5 percent to 2,110.99, and Hong Kong's Hang Seng was down 1.2 percent to 23,000.44. Benchmarks in Australia, Singapore and Taiwan were also lower, while those in New Zealand and the Philippines rose.

Falling commodities prices were keeping stock investors at bay, said Wong. Oil, for example, was nearly $114 a barrel at the end of April but is now below $100 per barrel. A slump on Wall Street on Friday also weighed on investor nerves.

On Friday, the Dow Jones industrial average lost 100.17 points to close at 12,595.75. The S&P 500 fell 0.8 percent to 1,337.77, and the Nasdaq lost 1.2 percent to 2,828.47.

Benchmark crude for June delivery was down 98 cents to $98.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract settled at $99.65 per barrel Friday, up 68 cents.

In currencies, the euro fell to $1.4089 from $1.4110 in late afternoon trading Friday in New York. The dollar strengthened to 80.95 yen from 80.84 yen.