Asian stocks slide as global mood sours


Posted at Jun 19 2008 05:50 PM | Updated as of Jun 20 2008 01:50 AM

Agence France-Presse

TOKYO - Share prices fell across Asia on Thursday with Shanghai sliding over six percent after Wall Street losses triggered by fresh jitters about soaring oil prices and the global credit crunch, dealers said.

They said markets were nervous about signs of growing inflationary pressures in the world's major economies, which are still struggling to overcome a US housing slump and related credit squeeze.

Shanghai was the worst hit with a loss of 6.5 percent as investors rushed to sell amid fears of a further deep correction.

Tokyo lost 2.2 percent, Hong Kong fell 2.3 percent, Sydney gave up 1.4 percent, Taipei dropped 2.1 percent and Seoul shed 1.9 percent.

Analysts said investors were worried about the gloomy outlook hanging over China and other regional markets.

Shanghai's 5.2 percent surge on Wednesday "was probably too rapid for the market's own good," Capital Securities' strategist Amy Lin told Dow Jones Newswires.

"When oil prices are still high and inflation worries still intense, the faster stocks rise the more likely they will fall rapidly too."

Shanghai's benchmark Composite Index has tumbled around 20 percent this month.

Europe's main stock markets were also under pressure in early trade, with London down 0.08 percent and Frankfurt 0.36 percent lower.

Investors were spooked by losses on Wall Street Wednesday, when rising oil prices and weak corporate earnings news hit confidence, dealers said.

They said investors were worried that the fallout from the US financial crisis might drag on for longer than previously thought.

"We saw some nasty earnings coming out of the US... and how the general economic environment is weighing on companies," said one trader in Tokyo.

"That's likely to affect sentiment here in Japan and the rest of Asia."

On Wednesday Wall Street's Dow Jones index slid 1.08 percent to close at 12,029.06 points as regional banking group Fifth Third Bancorp said it would seek fresh capital, highlighting ongoing troubles in the banking sector.

"The Nikkei may drop below the 14,000 mark if the Dow closes below the psychologically-key level of 12,000," said Yumi Nishimura, market analyst at Daiwa Securities SMBC. The Nikkei ended Thursday at 14,130.17 points.

Concerns that US banks will suffer fresh losses in the third quarter due to credit market problems may continue to weigh on sentiment, she said.

Adding to concerns, oil prices jumped 2.67 dollars to close at 136.68 dollars per barrel in New York on Wednesday.

New York's main oil futures contract eased to 135.94 dollars in Asian trade on Thursday as investors took profits ahead of a weekend meeting in Saudi Arabia between oil producing and consuming nations, dealers said.