Asian stocks closed mixed Tuesday with even more gloom enveloping the Chinese stock market after it tumbled to its lowest level in over 15 months.
The bourse in Shanghai slid nearly three percent to its lowest close since late February 2007, extending a deep correction that began last year.
Investors are concerned about high inflation in China and by moves to restrain bank lending in a bid to tame the rise in prices.
But Indian shares fared better, jumping nearly two percent on hopes that upcoming corporate earnings will be healthy enough to draw foreign investors.
However, overseas investors have dumped Indian shares so far this year, concerned that surging inflation will hit economic growth.
The resource-rich Australian stock market rose one percent, helped by the rally in oil prices to a new record of nearly 140 dollars per barrel on Monday. However, black gold slipped back to around 134 dollars on Tuesday.
Elsewhere in Asia, shares in Japan closed little changed, while Hong Kong and Taiwan posted modest gains.
But the South Korean market fell 0.6 percent, amid an ongoing political crisis for the country's recently elected president as the country braced for possible widespread strikes next month.
Investors were waiting for US economic data and second quarter earnings results from US investment banks Goldman Sachs and Morgan Stanley this week amid worries about possible write-downs due to the credit crunch.
The US is battling a housing market and economic downturn after defaults on risky mortgages ballooned into a global credit squeeze and left investment banks nursing huge losses.
Inflation due to soaring oil and food prices has also emerged as a major threat to the world economy.
TOKYO: Japanese share prices closed steady as investors turned cautious ahead of US economic data and earnings results from Wall Street banks, dealers said.
The benchmark Nikkei-225 index slipped 6.00 points or 0.04 percent to end at 14,348.37, a day after soaring 2.7 percent. The broader Topix index of all first-section shares inched up 0.29 points to 1,401.98.
"Even if the Nikkei rises, gains may not be sustained due to the thin volume," Tomochika Kitaoka, strategist at Mizuho Securities, told Dow Jones Newswires.
Depending on the US banking results, the Nikkei is expected to trade between 13,700-14,600 points, he said.
JFE Holdings fell 1.0 percent to 5,760 yen while Kobe Steel dropped 2.7 percent to 327 yen. Elpida Memory lost 2.7 percent to 3,900 yen and Advantest gave up 2.1 percent to 2,550 yen.
HONG KONG: Hong Kong share prices closed up 0.12 percent, dealers said.
The Hang Seng Index closed up 28.3 points at 23,057.99. Turnover was 48.27 billion Hong Kong dollars (6.19 billion US).
"The turnover remains low as we are now in the soft season with a lot of investors selling in May and going away" for summer vacation, Ben Kwong, associate director of KGI Asia, told Dow Jones Newswires.
China Unicom gained 3.2 percent to 15.28 dollars after CLSA upgraded the stock to "outperform" from "sell," saying the recent correction has made it attractive.
China Netcom ended 3.4 percent higher 22.80 dollars and China Mobile rose 0.1 percent to 107.60 dollars.
Oil refiner Sinopec rose 2.8 percent to 7.72 dollars, extending a 3.4 percent gain Monday, on continued hopes China will reform its pricing system for oil products.
Sun Hung Kai Properties dropped 0.6 percent to 114.30 dollars and Cheung Kong was down 0.3 percent at 113.90 dollars.
SYDNEY: Australian shares closed up 1.0 percent, dealers said.
The benchmark S&P/ASX 200 index rose 51 points to 5,422.7 while the broader All Ordinaries was up 49.6 points at 5525.9. Volume was 6.7 billion dollars (6.3 billion US).
"The resources and oil stocks have been the main driver, while some of the financial stocks, such as investment banks, have come back in favor today," said CMC Markets senior dealer Dominic Vaughan.
Miner BHP Billiton closed up 1.32 dollars at 44.93 while takeover target Rio Tinto rose 86 cents to 137.06.
Woodside petroleum gained 93 cents to 62.20, Santos was up 30 cents at 21.48 but Oil Search dropped four cents to 6.06.
Among banks, ANZ closed up 35 cents at 19.75. Allco Finance Group climbed 86 percent to 54 cents after announcing it would cut outstanding debt.
SHANGHAI: Chinese share prices closed 2.76 percent lower, dealers said.
The benchmark Shanghai Composite Index covering A and B shares closed down 79.35 points at 2,794.75 -- its lowest close since February 27, 2007 when it settled at 2,771.79 -- on turnover of 43.8 billion yuan (6.3 billion dollars).
"Oil hit another record high last night and this will unnerve investors," Guosen Securities analyst Wang Junqing told Dow Jones Newswires.
"I personally don't think Beijing can rescue the markets now even if it wants to, as there's little Beijing can do to keep global oil prices from rising," Wang added.
Air China fell 9.9 percent to 8.42 yuan, while China Eastern Airlines hit the 10 percent downside limit to close at 6.88 yuan.
Vanke lost 6.13 percent to 9.95 yuan. Haitong Securities fell by the 10 percent daily limit to end at 20.33 yuan.
The Shanghai A-share Index lost 2.75 percent at 2,931.83. The Shenzhen A-share Index fell 4.52 percent at 839.50.
The Shanghai B-share Index fell 4.95 percent to 208.3. The Shenzhen B-share Index was down 5.06 percent at 479.46.
TAIPEI: Taiwan share prices closed up 0.39 percent, dealers said.
The weighted index closed 32.02 points higher at 8,201.79 on turnover of 85.51 billion Taiwan dollars (2.81 billion US).
"There was a technical rebound today after recent steep falls," said Allen Lin, an analyst at Concord Securities. He expected the market to continue rising to 8,400-8,500 points this week.
AU Optronics was down 0.6 Taiwan dollars to 52.40. Taiwan Semiconductor Manufacturing Co. shed 0.70 to 65.20, while United Microelectronics Corp. closed unchanged at 17.00. China Airlines dropped 0.45 to 13.55.
SEOUL: South Korean shares closed 0.6 percent lower, dealers said.
The KOSPI index ended down 10.11 points at 1,750.71. Volume was 330 million shares worth 4.8 trillion won (4.69 billion dollars).
"Market conditions are not positive -- inflation risks persist and fears of domestic political instability are also growing," said Kwak Joong-Bo, an analyst at Hana Daetoo Securities.
Kwak said protests against the US beef import deal have escalated into general discontent with the government's other policies and led to industrial action.
Hyundai Engineering and Construction fell 5.1 percent to 76,900 won. Korean Air Lines was down 1.0 percent at 51,600 won. STX Corp fell 6.7 percent to 58,400 won.
Samsung Electronics dipped 0.4 percent to 688,000 won and LG Electronics dropped 1.1 percent to 136,500 won. Hyundai Motor added 0.3 percent to 81,200 won.
SINGAPORE: Singapore share prices closed 0.29 percent lower, dealers said.
The blue chip Straits Times Index eased 8.68 points to 3,028.24 on volume of 1.27 billion shares worth 1.28 billion Singapore dollars (944 million US).
K. Ajith, an analyst with UOB Kay Hian, said the mood was "do nothing in June," and while value was apparent in some quarters, there was no catalyst to encourage investors to get back into the market.
United Overseas Bank gained four cents to 19.24 Singapore dollars. City Developments slid 22 cents to 10.30. Singapore Airlines ended 10 cents higher at 15.06 and Singapore Telecommunications rose one cent to 3.73.
KUALA LUMPUR: Malaysian share prices closed 0.8 percent lower, dealers said.
The Kuala Lumpur Composite Index dropped 10.30 points to 1,227.76.
"Retail investors took the opportunity to sell into strength, reversing earlier gains," a dealer told Dow Jones Newswires.
Maybank ended 0.10 ringgit lower at 7.20, Telekom Malaysia was down 0.06 ringgit at 3.16 while Tenaga Nasional dropped 0.20 ringgit to close at 8.20.
BANGKOK: Thai shares closed 1.32 percent lower, dealers said.
The Stock Exchange of Thailand (SET) composite index lost 10.42 points to close at 777.17, while the blue-chip SET 50 index fell 8.31 points to 554.78.
"The market was quiet today. Investors sold big-cap shares and that drove the index down," said Pichai Lertsupongkit, senior vice president at Thanachart Securities. "Investors are waiting for share prices to drop lower."
Small political rallies against the government have been rumbling since May 25. Truck drivers, farmers and major unions have also threatened to join protests unless the government intervenes to help with soaring inflation.
Energy firm PTT fell 4.00 baht to close at 312.00. Bangkok Bank fell 1.00 to 119.00. Thai Airways International slipped 0.60 to 22.20.
JAKARTA: Indonesian shares closed 0.8 percent lower, dealers said.
The Jakarta Composite Index dropped 20.07 points to 2,377.97.
"I think the market may continue to correct tomorrow," a trader told Dow Jones Newswires.
Indofood fell 5.6 percent to 2,400 rupiah. Astra dropped 0.8 percent to 19,900 and Bank Rakyat shed 1.0 percent to 5,100.
MANILA: Philippine share prices closed 0.6 percent higher, dealers said.
The composite index gained 16.50 points to 2,637.26. The all-share index gained by 0.47 percent to 1,666.36 points.
"Investors are focused not on the economy of the country but on global matters," said Claire Quiray, of Accord Capital Equities.
"The US economy and oil prices. Everything will depend on the movement of the oil since it will determine the direction of inflation."
Philippine Long Distance Telephone Co. rose 2.9 percent to 2,455 pesos. Conglomerate Ayala Corp. gained 0.83 percent to 302.50 pesos. San Miguel Corp. A and B shares were unchanged at 41 pesos and 42 pesos respectively.
WELLINGTON: New Zealand share prices closed little changed, dealers said.
The NZX-50 gross index was down 1.73 points to close at 3,404.57.
Fletcher Building closed up five cents at 6.75 dollars.
"That's purely coming from a majorly oversold position, and bargain hunters entering the market," said Grant Williamson, of Hamilton Hindin Greene.
Telecom rose five cents to 3.84 dollars, Contact Energy gained six cents to 8.38, and casino operator Sky City was up two cents at 3.34.
MUMBAI: Indian shares closed 1.96 percent higher, dealers said.
The benchmark Mumbai 30-share Sensex index rose 301.08 points to 15,696.9.
"The markets rose on expectations of higher corporate earnings, which could boost overseas fund buying in coming months," said Hiten Mehta, a fund manager with Fortune Financial Services.
Reliance Communications fell 4.9 rupees or 0.92 percent to 530.2.
It slipped for the second straight day on concerns that a family feud could impact a blockbuster telecoms deal being discussed with South Africa's MTN.