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Asian stocks extend global losses on oil price drop

Tokyo - Asian stock markets fell in thin trading on Tuesday as falling oil prices deflated energy shares, while Singapore said it was kicking out a Swiss bank linked to Malaysia's 1MDB.

Investors were also eyeing the start on Thursday of a Group of Seven summit in Japan, where US President Barack Obama and other leaders from the club of rich nations will meet for annual talks largely focused on the sputtering global economy.

Shares of oil-linked companies slumped as crude dipped for a second day after a pledge from Iranian officials to keep up production.

A stronger US dollar and progress in controlling wildfires in Canada's crude-producing Alberta province also helped to dampen prices.

US benchmark West Texas Intermediate for July delivery was down 30 cents at $47.78 a barrel while Brent crude for July slipped 35c to $48.00.

In Tokyo, Japanese energy explorer Inpex tumbled 1.8% while refiner JX Holdings was down 0.4%.

In Hong Kong, Chinese energy giant CNOOC ended 2.1% off and PetroChina slumped 1.4%.

The Tokyo market ended down 0.9% as the stubbornly strong yen clouded the outlook for Japanese exporters' profits.

Shanghai finished 0.8% lower, Seoul fell 0.9%, and Sydney lost 0.4%. Hong Kong's Hang Seng index bucked the trend to end up 0.11%.

Singapore was down 0.6%. Also in the city state, the Monetary Authority of Singapore (MAS) said it had served Switzerland's BSI Bank - which has been linked to a global money-laundering scandal rocking Malaysia's state fund 1MDB - a notice of intention to withdraw its status as a merchant bank.

The MAS said it had also asked state prosecutors to investigate six senior executives of BSI Bank, including its former chief executive, for possible criminal offences.

It is the first time Singapore regulators have cancelled the licence of a merchant bank since 1984.

Global growth fears

Sentiment in Asia also took a hit from worries over a possible US interest rate rise as early as next month, analysts said.

Adding to the US central bank's hawkish signals last week that a June rate raise could be on the cards, Fed board member James Bullard weighed in with comments in Beijing on Monday that suggested markets could be behind the curve on the Fed's intentions.

Since raising rates in December for the first time in nine years, the US central bank in March essentially forecast two rate rises for this year. But markets have had much lower expectations amid lacklustre US economic data.

"Markets remain fragile as talk of a US interest rate hike in June puts some fear on whether global growth will remain resilient," Niv Dagan, Melbourne-based executive director at Peak Asset Management LLC, told Bloomberg News.

"The timing of future Fed rate hikes in the face of a sluggish economy is a major focus among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis."

Adding to fears of slowing global growth were figures on Monday showing Japan's exports faltered in April - after separate figures last week showed the world's number three economy dodged a recession in the first quarter.

On currency markets, the greenback rose sharply against most higher-yielding but riskier emerging market currencies.

Against the Japanese currency, the dollar bought ¥109.54, up from New York but still well down from ¥109.84 in Tokyo earlier on Monday.

In early European trade London, Frankfurt and Paris all shed 0.4%.


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