Bangkok - Investors in Asia dumped stocks Friday as weak
economic indicators from major nations intensified fears of a new global
recession, although a joint call to action by the Group of 20 nations helped
calm markets in Europe.
Oil prices stabilised near $81 a barrel after diving to a
near seven-week low on Thursday. The dollar was down against the yen and the
euro.
European stocks rose tentatively after a day of steep losses
on Thursday. Britain's FTSE 100 added 0.1% to 5 046.44. Germany's DAX rose 0.4% to
5 184.14 and the CAC-40 in Paris gained 0.1% to 2 784.53.
Wall Street was set for a higher opening after a statement
from the Group of 20 major economies pledged a strong and coordinated response
to the European debt crisis and weak economic growth in the United States and
other countries. Dow Jones industrial futures rose 0.7% to 10 727 while S&P
futures were 0.8% higher at 1 132.70.
Asian shares were pulled down earlier on Friday by a raft of
bad economic news including signs of a manufacturing downturn in China that
could reduce its demand for commodities and industrial components from other
nations.
Hong Kong's Hang Seng fell 1.4% to 17 668.83 after losing
nearly 5% the day before. Taiwan's TAIEX dropped 3.6% to close at a two-year
low of 7 046.22. Australia's S&P/ASX 200 index fell 1.6% to 3 903.20.
South Korean shares took a large hit, with the Kospi tumbling
5.7% to 1 697.44. Mainland China's Shanghai Composite Index lost 0.4% to 2
433.16. Japan's market was closed for a holiday.
A closely watched survey in Europe indicated a recession
could be on the way there, and a manufacturing survey suggested a slowdown in
China, which has been one of the hottest economies. Employment figures in the
US remained weak. Adding to the woes: Singapore said on Friday that inflation
jumped to a three-year high in August as housing and transportation costs rose
despite an economic slowdown.
"I think the most important thing is Europe and America
are both entering into recession at the same time, and the governments failed
to take decisive action to stop the decline," said Francis Lun, managing
director of Lyncean Holdings in Hong Kong. "Investors are disappointed and
fear a global recession. So that's why investors are getting out of
shares."
Lun also blamed "political squabbling" in the US
that is preventing President Barack Obama from spending the money needed to
create a jobs programme with real impact.
Meanwhile, Canada's finance minister had harsh words for
Europe. On Thursday, he warned of a second financial meltdown on the scale of
2008 if Europe doesn't take decisive action to recapitalise its banks and deal
with the Greek debt crisis.
"There's some justified frustration with respect to the
lack of political decisiveness in Europe," Finance Minister Jim Flaherty
said. "The markets are reacting."
Flaherty said Greece and other severely indebted nations
must be made to follow through with austerity programs to bring down spending,
and Europe must put up the billions of dollars that will be needed to ensure
banks don't fail.
In Hong Kong trade, Zijin Mining Group, China's biggest gold
miner, fell 7.8% amid a price drop in the precious metal as investors sold gold
to raise cash.
Stocks in Seoul slumped amid signs of weakness in China.
Hyundai Heavy Industries, the world's biggest shipbuilder, slumped 8.1%. Hynix
Semiconductor, the world's second-largest memory chip maker, fell 6%. Steel
giant POSCO fell 6.2%.
A slowdown in China could also blunt demand for imported raw
materials like iron ore. Australia's Fortescue Metals Group, a leading exporter
of iron ore, plummeted 9.3%.
Energy shares were whipped by the tumble in oil prices.
Australian oil and gas producer Woodside Petroleum sank 3.6%. China National Offshore Oil, known
as CNOOC, fell 1.3%.
On Wall Street on Thursday, the Dow Jones industrial average
fell 3.5% to close at 10 733.83. It was the second consecutive rout in the
stock market since Wednesday afternoon, when the Federal Reserve announced a
change in strategy for fighting the economic slowdown.
The Standard & Poor's 500 index, a broader measure of the stock market, and the Nasdaq composite, which is more heavily weighted with technology stocks, both fell more than 3% for the day.
The Fed announced on Wednesday that it would shuffle $400bn
of its own bond holdings in hopes of reducing interest rates on long-term
loans, a plan known as Operation Twist. The central bank hopes that if people
and businesses are able to borrow money more cheaply, they will spend
throughout the economy and give it a lift.
Still, the Fed announcement troubled investors because it came with a bleak assessment of the future. The Fed said it sees "significant downside risks to the economic outlook," including volatility in overseas markets.
Benchmark oil for November delivery was up 39 cents at
$80.89 in electronic trading on the New York Mercantile Exchange. Crude plunged
$5.41, or 6.3%, to settle at $80.51 on Thursday. That was its lowest point
since August 9.
In currency trading, the euro rose to $1.3530 from $1.3469
late on Thursday in New York. Earlier on Thursday, the euro fell to $1.3384 -
its lowest point since January 18. The dollar slipped to ¥76.26 from ¥76.40.