HONG KONG - Asian stocks fell sharply Tuesday amid concerns soaring oil prices will stoke inflation, with Shanghai suffering its worst slump in a year after China's central bank tightened credit conditions.
Investors were worried that rising energy costs and interest rates will hurt consumers and eat away at company profits, dealers said.
In Shanghai, share prices plunged 7.7 percent, the biggest one-day percentage loss since June last year, after the Chinese central bank ordered banks keep more money in reserve to contain inflation.
Hong Kong fell 4.21 percent, while Sydney closed 2.8 percent lower. Seoul shed 1.9 percent, Tokyo gave up 1.1 percent and Singapore closed 1.65 percent down.
The People's Bank of China hiked the reserve ratio for commercial banks for the fifth time this year, a move that is expected to curb bank lending and slow economic growth and investment flows into the stock market.
The key Shanghai Composite index has fallen nearly 50 percent since a peak last October 16, almost giving up all the gains from a stamp duty cut this April.
Chinese markets were closed for a public holiday on Monday, when other regional bourses tumbled after Wall Street's slide last week.
Oil prices rose in Asia on Tuesday despite efforts by leading producer Saudi Arabia to reassure consumers that it is ready to meet any increase in demand.
New York's main oil futures contract gained 71 cents to 135.06 dollars a barrel, heading back up towards Friday's record high of about 139 dollars.
Investors were waiting anxiously for trading to resume on Wall Street after Federal Reserve chairman Ben Bernanke said "upside risks" to inflation were forcing the Federal Reserve to be more vigilant.
His remarks added to speculation that the central bank may raise interest rates later this year in a policy U-turn after a string of interest rate cuts since September to try to ease a housing slump and credit crunch.
TOKYO: Japanese share prices closed down 1.13 percent as investors worried about high oil costs, a sharp fall in Chinese stocks and the uncertain outlook for the global economy, dealers said.
The benchmark Nikkei-225 index dropped 160.21 points to 14,021.17, after earlier dipping below the key 14,000 level for the first time in more than a week.
The broader Topix index of all first-section shares gave up 14.34 points or 1.03 percent to 1,383.20.
"I think the weakness (in stocks) is a temporary matter," JPMorgan strategist Masaru Ohnishi told Dow Jones Newswires.
Market conjecture that Japan's central bank may raise interest rates sooner than expected to tackle inflation sent real estate shares lower.
Mitsubishi Estate dropped 1.7 percent to 2,585 yen and Mitsui Fudosan gave up 2.5 percent to 2,380 yen.
Semiconductor issues lost ground in tandem with their US peers. Advantest shed 3.0 percent to 2,560 yen and Elpida Memory fell 2.7 percent to 4,030 yen.
HONG KONG: Hong Kong share prices tumbled, closing down 4.21 percent following the plunge on Shanghai's bourse, dealers said.
The Hang Seng Index lost 1,026.66 points at 23,375.52, off a low of 23,343.19 and a high of 23,741,09. It was its largest points fall since it dropped 1,339 to 23,469 on February 6.
Turnover was low at 82.16 billion Hong Kong dollars (10.53 billion US).
"Beijing's sooner and higher-than-expected hike in the reserve ratio shook both the local and mainland stock markets," Francis Lun, general manager of Fulbright Securities, told Dow Jones Newswires.
Mainland China banks listed in Hong Kong suffered the brunt of the falls.
Industrial and Commercial Bank of China ended 4.7 percent lower at 5.45 dollars, Bank of China dropped 3.3 percent to 3.79 and Bank of Communications slid 4.8 percent to 9.69.
SYDNEY: Australian share prices closed down 2.8 percent, dealers said.
The benchmark S&P/ASX 200 index lost 154.6 points at 5437.5, while the broader All Ordinaries fell 146.9 points to 5,544.3.
Macquarie Private Wealth associate director David Halliday said US Federal Reserve chairman Ben Bernanke's comments that higher energy prices have added to inflation risks contributed to the market's jitters.
"People are starting to question the world growth scenario and that's in an environment where, unquestionably, interest rates are going up globally," Halliday told Dow Jones Newswires.
SHANGHAI: Chinese share prices tumbled to close 7.73 percent lower, the biggest single-day percentage loss in more than a year after the central bank announced new tightening measures, dealers said.
Shares fell across the board after the People's Bank of China ordered lenders to keep more money in reserve.
"Investors see the sudden 100-basis-point hike in reserve requirement ratio as a red flag on the economy and they are worried about corporate earnings in the second half," Jacky Zhang at Capital Securities told Dow Jones Newswires.
The benchmark Shanghai Composite Index, which covers A and B shares, closed down 257.34 points at 3,072.33.
Tuesday's fall was the index's sharpest since June 4, 2007, when it lost 8.26 percent in a day.
"It was beyond expectations, and together with pressure on the liquidity from large-cap IPOs, it will deal blows to the stock market," said SYWG Securities in a research note.
The Shanghai A-share Index lost 270.02 points at 3,223.17. The Shenzhen A-share Index shed 84.99 points at 973.43.
Ten banks tumbled 10 percent, including China Merchants Bank, which closed at 25.31 yuan.
Bank of Communications fell 9.48 percent to 8.02 yuan, while Industrial and Commercial Bank of China was down 8.35 percent at 5.38.
TAIPEI: Taiwan shares closed 2.54 percent lower, dealers said.
The weighted index lost 217.96 points, finishing at 8,370.00.
Electronics stocks were down 2.40 percent and financials 3.08 percent lower.
The tourism sector dropped 5.45 percent despite upcoming talks between Taiwan and China on launching weekend charter flights.
"Concerns over a possible recession in the US continue to overshadow the US and international markets," said Johnny Lee, an analyst at President Securities.
SEOUL: South Korean share prices closed 1.9 percent lower, analysts said.
The KOSPI index ended down 34.58 points at 1,774.38, the lowest level since the April 18 close at 1,771.90.
The government's ability to push through economic reforms came under question after the prime minister and the entire cabinet offered to quit following weeks of protest over the resumption of US beef imports.
"Political risk is suddenly growing and is putting additional strain on investor sentiment," said Korea Investment and Securities analyst Kim Hak-Gyun.
Samsung Electronics slipped 2.9 percent to 666,000 won and LG Electronics fell 2.2 percent to 131,500.
Hyundai Heavy lost 3.3 percent to 366,000 and Daewoo Shipbuilding slumped 5.2 percent to 43,600.
SINGAPORE: Singapore share prices closed 1.65 percent lower, dealers said.
The blue chip Straits Times Index dropped 50.97 points to 3,033.05 on volume of 1.31 billion shares worth 1.50 billion Singapore dollars (1.1 billion US).
"There are a few potential land mines that could haunt market sentiment this week," Kim Eng Securities said, referring to important US data including the April trade balance due later Tuesday, retail sales on Thursday and consumer price index figures out Friday.
Banks ended lower, with DBS Group falling 34 cents to 19.16 Singapore dollars, United Overseas Bank down 32 cents at 18.88 and Oversea-Chinese Banking Corp. slipping nine cents to 8.23.
KUALA LUMPUR: Malaysian stocks closed little changed, dealers said.
The Kuala Lumpur Composite Index fell 0.02 points to 1,230.96.
"It was a bit of a mixed day today with some investors opting to bargain hunt blue-chips and some oil and gas related sectors while others took the opportunity to sell into strength," a dealer told Dow Jones Newswires.
"The KLCI may continue to consolidate within 1220 to 1250 in the absence of any fresh catalysts," the dealer added.
Telekom Malaysia lost 0.62 percent to 3.18 ringgit and Genting shed 0.88 percent to 5.65 ringgit.
Maybank was flat at 7.35 ringgit and Tenaga added 1.82 percent to 8.40 ringgit.
BANGKOK: Thai share prices closed 1.69 percent lower, dealers said.
They said the bourse followed regional markets, and that investors were also still wary of the political situation as protests rumbled on in Thailand.
The Stock Exchange of Thailand (SET) composite index lost 13.64 points to close at 791.94, while the blue-chip SET 50 index fell 9.98 points to 566.10.
"The main concerns are the same as other regional markets," Kimeng Securities analyst Mayuree Chowvikran said.
"Investors are concerned about global oil prices and high inflation rates," Energy firm PTT Plc fell 6.00 baht to close at 324.00 baht, while its subsidiary PTT Exploration and Production dropped 5.00 to close at 179.00.
Bangkok Bank fell 2.00 at 119.00 while Kasikorn Bank and Siam Commercial Bank both lost 1.00 to close at 76.50 and 80.50 baht respectively.
JAKARTA: Indonesian shares closed 1.5 percent down, dealers said.
The Jakarta Composite Index fell 31.96 points to 2,378.81.
"Foreign funds were seen as dominant sellers on concerns over sluggish performance in US equity markets," a trader said.
Coal miner Bumi Resources closed down 3.6 percent at 8,150 rupiah, rival Bukit Asam was down 3.2 percent at 15,100, while Bank Rakyat ended down 4.7 percent at 5,100.
Indosat gained 18 percent at 6,650 on news Qatar Telecom bought 40.8 percent in the company at premium.
MANILA: Philippine share prices closed down 3.4 percent, dealers said.
The composite index fell 93.75 points to 2,645.95 points. The all-share index fell 2.6 percent to 1,667.04 points.
Only eight stocks advanced compared to 95 decliners and 42 that were unchanged.
"It all started from the US market. It fell last Friday and even though it rebounded on Monday... it wasn't really a lot," she remarked.
Philippine Long Distance Telephone Co. fell 3.4 percent to 2,435 pesos. Megaworld Corp. fell 9.89 percent to 1.64 pesos. San Miguel Corp. saw its A shares remain unchanged at 41.50 pesos while its B shares fell 2.38 percent to 41 pesos.
WELLINGTON: New Zealand share prices closed 0.27 percent higher, dealers said.
The NZX-50 gross index rose 9.40 points to 3,505.90 on thin turnover worth 87.8 million dollars (67.4 million US). There were 56 rising stocks and 45 falls.
"That's like January days, so it's pretty disappointing all round," said Stephen Wright of ASB Securities of the light turnover.
Market leader Telecom rose one cent to 3.86 dollars, second-ranked Contact Energy fell five cents to 8.59, and Fletcher Building fell two cents to 7.35.
Casino company Sky City was down six cents at 3.51 dollars.
MUMBAI: Indian shares closed 1.17 percent lower, dealers said.
The benchmark Mumbai 30-share Sensex index was off 176.85 points at 14,889.25, after hitting a new intra-day low for the year, on its third straight trading day of losses.
"Lack of faith in global equities and concerns about monetary tightening saw a fresh funds sell-off," said Bhaskar Kapadia, partner with brokerage Pyramid Securities.
The Sensex at one point hit 14,645.31, down 2.79 percent, before recovering on bargain-hunting.
Concerns that India's central bank may hike borrowing costs or take other steps to slow lending in a bid to curb inflation -- running at more than eight percent -- had hurt sentiment, dealers said.