Asia stocks drop after big quake

2011-03-11 09:25

Hong Kong - Asian shares dropped after a massive earthquake hit Japan, including the capital Tokyo, darkening an already bleak mood caused by weak economic data and unrest in Saudi Arabia.

The quake struck just before the close of Tokyo stock trading. Japan's Nikkei average closed at an intraday and five-week low, down 1.7% on the day.

The Hong Kong's Hang Seng share index was down 1.8%, and Nikkei futures in Singapore tumbled more than 3%. At 08:50, Nikkei June futures were down 2.8% at 10 075 .

The magnitude 8.9 quake shook buildings in Tokyo, causing "many injuries" and triggered a four-metre (13-ft) tsunami, NHK television and witnesses reported.

The yen extended losses against the dollar after the quake, falling to ¥83.29 to the dollar compared with ¥82.80 before it struck.

Brent crude held near $115 per barrel as investors monitored developments in the Middle East. Forces loyal to Libyan leader Muammar Gaddafi battled rebels at an oil port, while Saudi police fired in the air to disperse protesting Shi'ites.

Oil prices are up by a quarter this year, with most of the gains coming since the Libyan crisis erupted.

While oil prices around this level posed no substantial threats to the world economy or financial markets, the risk that prices may rise to damaging levels has risen substantially, Barclays Capital strategists said.

Chinese inflation in February remained close to 5%, suggesting tighter monetary policy may be needed, adding to the uncertainty.

Key stock indexes in Australia and South Korea closed down more than 1% each. The broader Asian market outside Japan was down 1.4%, extending its drop by more than 3% for the week as fresh outbreaks of violence in the Middle East kept markets on edge.

Weak US economic data spurred some profit taking in shares in developed markets which have enjoyed a handsome run this year, though some bargain buying checked losses.