Asia stocks slump on Wall Street drop, oil prices

June 19th, 2008 - 8:59 pm ICT by IANS  

Tokyo, June 19 (DPA) Rising oil prices and overnight falls on Wall Street sent stocks in Asia down Thursday with shares in China seeing the biggest tumbles. Shares on China’s main stock market lost 6.5 per cent, one day after a 5-percent rebound had ended a 10-day slump.

The key Shanghai Composite Index, which tracks shares traded in foreign and Chinese currency, closed at 2,748.87.

The smaller Shenzhen Component Index also plunged 7.49 percent with shares in banks, petrochemical firms and airlines all falling heavily.

The Shanghai Daily newspaper attributed Thursday’s fall to remarks made by central bank Governor Zhou Xiaochuan in the United States Wednesday, when he said tackling inflation remained the priority of China’s economic policy.

Zhou’s remarks “renewed investors’ concerns that the government will step up measures to curb rising prices,” while investors were apparently also less optimistic that the government might intervene to bolster the stock markets, the newspaper said.

The big drop Thursday continued a period of strong daily fluctuations amid an overall downward trend in China’s inflated share prices with analysts expecting recent volatility to continue.

Losses in the mainland China stocks added to pessimism in Hong Kong, whose Hang Seng Index fell below 23,000, slumping 2.26 percent to 22,797.61.

Falls on Wall Street were the main factor driving down stocks in Tokyo, where investors worried about further fallout from the credit crisis after a US financial analyst warned of more related writedowns. The United States is Japan’s biggest export market.

The Nikkei 225 Stock Average fell 2.23 per cent to 14,130.17, and the broader Topix index of all first-section issues was down 2.41 percent at 1,375.6.

In Taiwan, the Taiex was down 2.07 per cent, South Korea’s Kospi fell 1.88 percent and Australia’s ASX 200 Index slumped 1.41 percent.

In South-East Asia, Thailand saw the biggest declines at 3 percent with political instability adding to worries about oil prices and inflation, brokers said.

In other South-East Asian countries, Singpore’s Straits Times Index fell 1.56 per cent, the Ho Chi Minh Stock Index drooped 2.3 percent, the Kuala Lumpur Composite Index dropped 1.34 per cent and the Philippine Stock Exchange’s 30-share composite index was down 1.35 percent.

In South Asia, Pakistan’s stock market plunged as fears of an armed conflict with Afghanistan were causing foreign investors to pull out their money, traders said.

The benchmark KSE-100 Index was off 3.18 percent at 11,870.95.

US stocks suffered significant declines Wednesday, after the second-largest US package company FedEx reported a loss and a financial analyst warned of more credit crisis writedowns.

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