Asian stocks slide on record oil prices, US slump

Asian stocks tumbled on Wednesday with Japanese shares falling 1.65 percent after Wall Street took a beating in the wake of a fresh record for crude oil prices.

The Japanese market closed in the red as oil prices homed in on 130 dollars per barrel after rising overnight in New York to new records, stoking concerns that rising inflation will hit consumer spending and crimp business profits.

Worrisome inflation data, black gold's feverish onward march and a cloudy outlook for corporate earnings hit US shares Tuesday, with the Dow Jones Industrial Average sinking more than 1.5 percent.

Investors on Wall Street were "reminded of uncertainty about how the credit crisis will affect the economy," said Yoshikiyo Shimamine, the chief economist at Dai-Ichi Life Research Institute in Tokyo.

The US is battling a house price downturn and default crisis among subprime -- or riskier -- mortgages, which has inflicted huge financial losses and led to a global credit crunch, with the US expected to drag world growth lower.

Elsewhere in Asia on Wednesday, Chinese share prices tumbled 1.87 percent by afternoon trade, Australia closed down 1.4 percent and South Korea fell more than one percent.

Singapore, Hong Kong and India were pushing towards losses of one percent while Taiwan closed down 0.59 percent.

"The sharp fall on Wall Street overnight dragged down local shares," said Dickie Wong, an associate director at Friedmann Pacific Investment in Hong Kong.

The poor performance in Asia followed steep falls on Tuesday, including a tumble of nearly 4.5 percent in China, where investors are still digesting the consequences of the devastating May 12 earthquake in Sichuan.

Beijing has estimated the massive quake will cost industries based in Sichuan some 9.6 billion dollars. State media has said the deadly quake is set to cut China's 2008 economic growth by at least 0.2 percentage points.

The red numbers in Asia also come after a sharp rally since mid-March, which had raised hopes investors were becoming more sanguine about the financial crisis and the problem of surging food and fuel costs.

But experts said the difficulties in the global economy appeared to have come the fore again.

"We had a good rally and now the markets are focusing on inflation," said K Ajith, an analyst at UOB Kay Hian in Singapore. "Inflation is not a new issue but the continued rise in oil prices is making the market nervous."

Many of Asia's smaller markets also suffered Wednesday, with the Philippines ending nearly one percent lower and Indonesia trading down nearly 1.5 percent.

cketing oil prices renewed inflationary concerns," said Jose Vistan, research director at AB Capital Securities in the Philippines.

"The fundamentals point to even higher oil prices, and making matters worse is the speculative element as funds are now flowing into commodities," he said.

The IMF has estimated that losses from the credit crisis and US subprime debacle could spiral to nearly one trillion dollars.

Recent data have showed that economies in Asia, including Japan, expanded in the first three months of the year, but expectations of a US-led global economic slowdown continue to shadow investors.