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US economy fears knock Asian stocks

Jun 07 2011 09:47 Sapa

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Bangkok - Asian stock markets fell for a second day on Tuesday as pessimism about the health of the US economy led to another session of dour trading on Wall Street.

Oil prices slipped below $99 a barrel ahead of a key Opec meeting this week. The dollar strengthened against the euro and the yen as European officials haggled over how to prevent Greece from defaulting on billions of euros in debts.

Japan's Nikkei 225 was virtually unchanged at 9 383.32 and South Korea's Kospi index slipped 0.8% to 2 095.49, with heavy industrials sinking amid fears of a global economic slowdown.

Hyundai Heavy Industries slipped 1.3%, while steelmaker POSCO was 1.2% lower. Memory chip maker Hynix Semiconductor, among the most actively traded on the Kospi, bounced 2%.

Minerals took a beating on several exchanges. Hong Kong's Hang Seng index lost 0.7% to 22 794.47. China Shenhua Energy, the state-owned coal miner, plunged 4.1% in Hong Kong trading.

Australia's S&P/ASX 200 lost 0.7%, with BHP Billiton, the world's largest mining company, dropping 1%.

In Japan, news reports that Toshiba and Sony may cooperate to make themselves more competitive in small and midsize liquid crystal display panels for mobile and tablet devices sent their shares in opposite directions. Toshiba gained 1.5% while Sony slipped 2.1%.

Tokyo Electric Power, the Japanese utility battling to bring a crippled nuclear power plant under control, rose 6.7%. Its shares were battered Monday after Tepco acknowledged that more action was needed to prevent a massive spill of radioactive water into the environment.

More than 100 000 tonnes of contaminated water have pooled beneath the plant in northeastern Japan since it was hobbled by an earthquake and tsunami on March 11.

The US economy's failure to thrive despite two rounds of so called "quantitative easing" by the Federal Reserve - involving massive injections of cash to keep the economy chugging - has led to speculation that a third round may be on the way.

"Would it help? Would it hurt? On the first question, our sense is that it won't ultimately prove necessary and that it's certainly too early for Fed officials to be make any hints in that direction," analysts at DBS Bank in Singapore wrote in a report.

On Wall Street on Monday, investors remained focused on last week's grim employment report. The Labour Department reported that employers added only 54 000 new workers in May. The unemployment rate inched up to 9.1% from 9%.

The Dow Jones industrial average fell 0.5% to 12 089.96. The Standard & Poor's 500 index dropped 1.1% to 1 286.17, the first S&P closing below 1 300 since March 23. The Nasdaq composite fell 1.1% to 2 047.39.

Benchmark crude for July delivery dropped 43 cents to $98.58 in electronic trading on the New York Mercantile Exchange. The contract had settled at $99.01 per barrel on the Nymex on Monday.

Analysts are looking for clues on what Opec will do about oil production when the cartel meets Wednesday in Vienna. Opec ministers could decide to try to lower oil prices by increasing production. Opec officials have said that they believe oil prices are too high and threaten global economic recovery.

In currencies, the euro slipped to $1.4580 from $1.4587 late on Friday in New York. The dollar strengthened to ¥80.19 from ¥80.13.

opec  |  wall street  |  us economy  |  asian markets
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