Asian stocks close mostly down on credit crisis, inflation woe

Asian stocks tumbled Tuesday as concerns about the global credit squeeze and surging inflation flared again, with the G8 industrial powers warning soaring food and fuel prices threaten world growth.

Taiwanese shares fell the most, sliding nearly four percent, closely followed by a slump of over three percent in Hong Kong. South Korea was down nearly 3.0 percent and Asia's biggest bourse, Japan, skidded some 2.5 percent.

The falls came after Wall Street retreated Monday on renewed fears about the global credit squeeze following the default crisis among so-called "subprime" -- or riskier -- US homeloans.

Investors were nervous ahead of key second quarter earnings reports from major US banks, which have lost billions of dollars on securities whose value is linked to subprime loans.

Meanwhile, the Group of Eight industrial powers called Tuesday at their

annual meeting in Japan for efforts to cool sizzling oil prices, warning soaring fuel and food costs were a threat to world economic growth.

Investors worry surging inflation will crimp business profits, hit consumer spending and lead to higher borrowing costs.

Elsewhere in Asia, Chinese shares bucked the trend to rise 0.81 percent, but Indian and Singaporean shares fell more than one percent. The region's smaller markets also closed down, generally by more than one percent.

The economic slowdown in the US following the subprime crisis also continued to rattle investors. The US is the world's biggest economy and a key buyer of Asian goods and services.

TOKYO: Japanese shares closed 2.45 percent lower on fresh jitters over the US financial sector, after briefly falling below 13,000 for the first time in nearly three months, dealers said.

The Tokyo Stock Exchange's benchmark Nikkei-225 index tumbled 326.94 points to end at 13,033.10, briefly falling below the psychologically important 13,000-level for the first time since April 15.

The broader Topix index of all first-section shares fell 29.29 points or 2.23 percent to 1,283.51.

"The Nikkei may find support above 12,890 if the Dow (Jones Industrial Average) holds above 10,800," Yutaka Yoshino, a technical analyst at Nikko Citigroup, told Dow Jones Newswires.

Mitsubishi UFJ Financial Group dropped 3.4 percent to 934 yen, Mizuho Financial Group fell 3.7 percent to 493,000 yen while Sumitomo Mitsui Financial Group shed 4.1 percent to 771,000 yen.

Sony shed 4.1 percent to close at 4,420 yen. Nintendo lost 3.3 percent to finish at 59,400 yen.

HONG KONG: Hong Kong share prices tumbled to close down 3.16 percent, dealers said.

The Hang Seng Index ended down 692.25 points at 21,220.81. Turnover was 63.74 billion Hong Kong dollars (8.17 billion US).

"Investors don't have confidence to hold stocks for any period of time given the continued volatility in global markets," Ben Kwong, chief operating officer at KGI Asia, told Dow Jones Newswires.

Some analysts said the stock market's decline had made valuations for most Hong Kong-listed stocks attractive.

"Any way you look at it, the market is not expensive," said Eugene Law, an analyst at Celestial Securities.

Handset maker Foxconn International Holdings plunged more than 10 percent after a broker downgrade. Hong Kong Exchanges and Clearing (HKEx) lost nearly 5.9 percent.

The city's fifth largest lender Bank of East Asia, which has an exposure to subprime-related assets, dropped 5.86 percent.

SYDNEY: Australian shares closed down 1.4 percent, dealers said.

The benchmark S&P/ASX 200 index was down 69.6 points at 4,932.9, its weakest close since August 2006, while the broader All Ordinaries fell 69.3 points to 5022.4. Volume was 5.0 billion dollars (4.8 billion US).

"It is mainly the financial sector that has dragged most of the market down, which was a continuation of the theme out of the US last night," said CMC Markets senior dealer Dominic Vaughan.

Among major banks, ANZ lost 60 cents to 18.60 dollars. Investment firm Babcock & Brown dropped 6.5 percent to 6.51. Allco Finance Group added 4.4 percent to 36 cents after selling its interest in Singapore real estate assets.

BHP Billiton fell 25 cents to 39.50 while its takeover target Rio Tinto rose 20 cents to 123.45.

Iron ore miner Murchison Metals fell 6.6 percent to 2.71 after admitting that China's Sinosteel had beaten it in a race to gain control of fellow iron ore miner Midwest Corp.

Midwest Corp was steady at 6.38, the price that Sinosteel is offering.

SHANGHAI: Chinese share prices closed up 0.81 percent, dealers said.

The benchmark Shanghai Composite Index, which covers both A and B shares, closed up 22.55 points at 2,814.95 on turnover of 87.5 billion yuan (12.8 billion US dollars.)

"The market lacks upside momentum," Greatwall Securities' analyst Zhang Yong told Dow Jones Newswires. "Strong earnings forecasts have been priced in, which can't lift stock prices further."

Airlines led the gains with Air China up 6.83 percent to 10.17 yuan, while China Southern Airlines gained 2.15 percent to 8.09 yuan. Shanghai Airlines edged up 0.97 percent to 6.24.

Coal mines were also strong with China Shenhua Energy, the country's largest coal producer, rising 3.01 percent to 33.93 yuan.

But Industrial and Commercial Bank of China, the country's largest bank, was down 1.21 percent at 4.91 yuan.

China Minsheng Banking bucked the trend, up 2.03 percent to 6.03 yuan after the bank projected first half net profit was likely to rise over 110 percent year-on-year.

TAIPEI: Taiwan share prices closed 3.94 percent lower, dealers said.

The weighted index fell 289.26 points to 7,051.85 on turnover of 105.10 billion Taiwan dollars (3.46 billion US).

"Share prices fell sharply due to profit-taking from yesterday's rebound and an apparent lack of support from government-related funds," said Allen Lin of Concord Securities.

Surging food and fuel prices pushed Taiwan's inflation rate in June to an eight-month high of 4.97 percent, government data showed Monday.

"The high consumer price inflation reading hits consumption, and will cause the central bank to hike rates," said Henry Miao of Hua Nan Securities Investment Management. Cathay Financial closed down 6.36 percent at 60.40 Taiwan dollars. Taiwan Semiconductor Manufacturing Co. dropped 2.00 percent at 58.90 and United Microelectronics Corp. fell 5.43 percent at 14.80.

Nan Ya Plastics fell 4.95 percent to 53.80. AU Optronics plunged 5.77 percent to 44.90. China Airlines was limit-down 7.0 percent at 11.75.

SEOUL: South Korean shares closed 2.9 percent lower, dealers said.

The KOSPI index fell as much as 4.5 percent to an intra-day low of 1,509.20 before closing at 1,533.47, down 46.25 points. Volume was 5.2 trillion won (5.03 billion dollars).

"Inflation fears are escalating, producing greater uncertainty over how policymakers will handle interest rates and forex," said Ryu Yong-Seok, a Hyundai Securities analyst.

"The KOSPI may fall further to as low as 1,460 points."

Kookmin Bank plummeted 8.6 percent to 55,000 won. Samsung Electronics slumped 3.4 percent to 593,000 won. Kia Motors plunged 6.3 percent to 11,200 won.

Hyundai Engineering Construction plummeted 8.5 percent to 55,000 won.

SINGAPORE: Singapore share prices closed 1.62 percent lower, dealers said.

The blue-chip Straits Times Index fell 47.50 points to 2,886.62. Volume totalled 1.12 billion shares worth 1.28 billion Singapore dollars (941 million US).

"People are feeling increasingly cautious ahead of the results season both here and in the US and ck Exchange of Thailand (SET) composite index fell 8.06 points to close at 722.50 points, while the blue-chip SET 50 lost 6.77 points to close at 512.89.

"The Thai market today fell in line with other regional markets," said Viriya Lappromrattana, senior vice president at Kiatnakin Securities.

"But, our market lost due mainly to growing concern over political uncertainty, especially regarding two court cases today (Tuesday)."

PTT fell 8.00 baht to close at 282.00 baht. Bangkok Bank fell 2.00 to 476.00. Kasikorn Bank edged down 0.50 to 66.50.

JAKARTA: Indonesian shares closed 1.1 percent lower, dealers said.

The Jakarta Composite Index dropped 24.85 points to 2,278.97.

A trader told Dow Jones Newswires that banking shares pulled the index up from an intra-day low of 2,263.77.

"Buying in most bank blue-chips... lifted the main index from its low," he said.

Nickel miner Inco closed 6.2 percent lower at 5,300 rupiah and rival Antam also dropped 2.5 percent at 2,975, while heavyweight Telkom also ended 1.4 percent lower at 7,300.

MANILA: Philippine shares closed 1.5 percent higher, dealers said.

The composite index added 35.89 points to 2,450.55. The all-share index rose 11.04 points to 1,548.81.

Astro del Castillo of First Grade Holdings told Dow Jones Newswires: "This could just be a dead cat bounce. The light turnover suggests everyone remains cautious."

PLDT rose 2.8 percent to 2,425 pesos, while Manila Electric added 6.7 percent to 48 pesos. Ayala Land gained 2.2 percent to 9.20 pesos.

WELLINGTON: New Zealand shares closed up 1.25 percent, dealers said.

The NZX-50 gross index rose 39.14 points to close at 3,160.59.

"It's really only the quality stocks that are coming in for attention," said Grant Williamson of Hamilton Hindin Greene.

Fletcher Building climbed 31 cents to 6.53 dollars. Telecom rose nine cents to 3.47 dollars. Contact Energy gained 12 cents to 7.72.

MUMBAI: Indian shares closed 1.3 percent lower, dealers said.

The benchmark Mumbai 30-share Sensex index fell 176.34 points to 13,349.65.

"Increasing global credit concerns pulled the markets down. We expect quarterly earnings to become the next trigger," said Advait Date, dealer with brokerage BHH Securities.