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Asian stocks sink on fears over oil, US

(Agencies)
Updated: 2008-06-27 19:50

HONG KONG -- Asian stock markets tumbled Friday amid growing alarm as oil prices spiked above $141 a barrel for the first time and Wall Street plummeted overnight.

Passersby look at a stock price board outside a securities company in Tokyo, Friday, June 27, 2008. Japanese stocks dropped for a seventh day to a two-month low on Friday as sentiment turned downbeat on an overnight tumble on Wall Street and skyrocketing global oil prices. The benchmark Nikkei 225 index lost 277.96 points, or 2.01 percent, to 13,544.36, the lowest finish since late April.  [Agencies]

The sell-off spread across the entire region, with nearly every key Asian index in the red. European markets were mixed in early trading.

Shanghai's benchmark plunged more than 5 percent to a 16-month low and India's Sensex fell 4.3 percent. Japanese stocks dropped for a seventh day to a two-month low. Markets in Hong Kong, South Korea, New Zealand and the Philippines were off around 2 percent.

Sentiment took a hit after US stocks sank Thursday, with the Dow Jones industrial average sliding more than 3 percent to its lowest level in almost two years.

Worries over the outlook for the American economy -- a vital export market for Asia -- intensified after dismal news about a number of industries. Analysts downgraded General Motors Corp., Citigroup and Merrill Lynch & Co., while tech companies Oracle Corp. and BlackBerry maker Research In Motion Ltd. offered disappointing forecasts.

Oil prices, which climbed above $140 a barrel late Thursday, surged past $141 in Asian trading Friday, aggravating fears about inflation and rising costs.

"We've still got bad news on the credit crunch, we've got bad news about consumers," said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. "The macro environment is not a good one and people are very risk averse."

European markets were mixed, with Germany's DAX down 0.8 percent, while Britain's FTSE 100 was up 0.1 percent and France's CAC 40 was down 0.9 percent.

In China, the Shanghai Composite Index sank 5.3 percent to 2,748.43 points, the lowest close since February 9, 2007. Aside from record crude prices, reports of speculation about possible bank rate hikes were spooking traders.

Institutional investors also were increasingly disappointed with the government for not doing more to slow this year's slide in Chinese stock prices, said Xu Zhiyuan, strategist at Capital Edge Investment and Management in Shanghai.

"Investors are selling shares regardless of the loss," he said.

Huaneng Power International Inc. was one of the hardest-hit stocks, falling nearly 10 percent. Airlines also suffered from the oil news, with China Eastern Airlines falling 9.7 percent and China Southern Airlines falling 9.5 percent.

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