Asian stocks fall after poor US, China data

Agence France-Presse

Posted at Jul 11 2011 02:07 PM | Updated as of Jul 11 2011 10:07 PM

HONG KONG - Asian stock markets slipped on Monday after an anaemic US jobs report last week and data showing Chinese inflation still stubbornly high despite Beijing's numerous monetary policy tightening measures.

Sydney was hit by a sell-off amid concerns over a proposed carbon tax unveiled by the government on Sunday, while the euro was also under pressure due to the ongoing European debt crisis, with Italy now in focus.

In early trade Tokyo was 0.48% lower, Hong Kong fell 1%, Sydney dropped 1.35% and Shanghai shed 0.57%. Seoul gave up 0.86%.

The US Labor Department said on Friday that the economy created just 18,000 jobs in June, dashing hopes that the economic recovery might be gathering speed.

Market-watchers had been hoping for a strong rise after data Thursday showed strong growth in private sector jobs creation.

Hopes for the global recovery were dealt another blow Saturday when China announced inflation surged to a three-year high of 6.4% in June, despite five interest rate hikes by leaders struggling to rein in soaring food costs.

The figures is up from May's 5.5% and well above the government target of four percent.

China has hiked interest rates five times since October -- most recently on Wednesday.

"We expect a day of risk-off sentiment (Monday) as markets adjust to poor US data and high CPI inflation ... out of China over the weekend," Credit Agricole said in a note to clients.

"The Chinese data is negative because it indicates that price pressures are continuing to spread throughout the economy despite policy tightening thus far and despite growth slowdown," it added, according to Dow Jones Newswires.

But Okasan Securities strategist Hideyuki Ishiguro said there could be some support for markets due to expectations of a recovery in US employment in July as auto output recovers from parts supply problems caused by the Japan quake.

He also said many analysts consider China's consumer prices index may have peaked in June and would begin to ease in the second half of the year.

Sydney's S&P/ASX 200 fell as traders grew jittery over plans announced on Sunday to tax carbon pollution at Aus$23 ($24.74) per tonne to help battle climate change.

Among the big losers were airlines Qantas and Virgin Australia, which slumped after the government confirmed it would not offer them concessions over the levy.

Rupert Murdoch-owned News Corp was also sold off as investors reacted negatively to the phone-hacking scandal that resulted in the closure of its British tabloid News of the World.

On currency markets the euro dropped to $1.4218 in Tokyo morning trade from $1.4258 in New York late Friday while the European currency also retreated to 114.72 yen from 114.91 yen. The dollar fetched 80.69 yen against 80.55 yen.

The euro was weighed by fears that the the eurozone debt crisis would spread to Italy.

Traders last week sold Italian debt and banking stocks as they worried about the possibility the country would be undermined by the same debt concerns as those hitting Greece, Portugal and Ireland.

The market is looking ahead to a top European officials' meeting in Brussels later in the day at which they will "coordinate their positions" on the second Greek rescue package.

Also later this week the results of a "stress test" on Europe's banking system will be released.

New York's main contract, light sweet crude for delivery in August, fell 19 cents to $96.01 a barrel.

Brent North Sea crude for August delivery shed 39 cents to $117.94.

Gold opened at $1,543.00-$1,544.00 an ounce in Hong Kong, up from $1,527.00-$1,528.00 at the close on Friday.