Asia stocks down on China data doubts, Wall Street

[August 12, 2009]  SHANGHAI (AP) -- Asian markets tumbled Wednesday with Chinese shares falling nearly 5 percent on renewed jitters over the economic outlook after Wall Street suffered its biggest loss in five weeks. European markets were mixed.

Analysts said the sell-off, particularly in China, was partly a correction of Tuesday's rally when markets overreacted to data showing Beijing's massive stimulus spending was adding momentum to the world's third-biggest economy. After sifting the slew of figures, investors decided the signs of improving growth weren't as impressive as hoped for.

"The momentum of the economic recovery is not very good, because it's not as fast as expected," said Huang Xiangbin, an analyst for Cinda Securities in Beijing. "Not so much private investment is following the government investment."

U.S. stock markets fell Tuesday as the Federal Reserve started a two-day policy meeting that may provide a fresh assessment of how the world's largest economy is faring. The U.S. central bank is expected to hold interest rates steady at near zero when it ends its meeting Wednesday.

European shares were mixed in early trading, with Britain's FTSE 100 slipping 0.2 percent while Germany's DAX index gained 0.4 percent and France's CAC-40 edged up 0.1 percent.

Asia's biggest benchmark, Tokyo's Nikkei 225 stock average, retreated from a 10-month high, losing 150.46 points, or 1.4 percent, to close at 10,435.00. A stronger yen hurt exporters' shares.

Fnancial stocks came under pressure after influential banking analyst Richard Bove of Rochdale Securities wrote in a research note that bank earnings won't improve in the second half of this year and that many companies will post losses.

"His report came in just as investors were looking for leads to sell shares," said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. in Tokyo.

Hong Kong's Hang Seng Index fell 638.97, or 3 percent, to 20,435.24 on heavy selling of shares in big mainland Chinese companies and weakness in mainland-traded shares.

Shanghai's Composite Index tumbled 4.7 percent to 3,112.72, with financial and steel companies like Baoshan Iron & Steel and China Life Insurance leading the decline.

Figures released Tuesday in China showed improvement in trade, retail sales and industrial production, adding to spreading signs of a global recovery. But some said the gains were not as big as hoped for, and corporate profits remain relatively weak.

Australia's benchmark S&P/ASX 200 index edged up 0.3 percent to 4,343.10, helped by stronger bank shares.

Elsewhere, shares fell in South Korea, Taiwan and the Philippines.

In the U.S. Tuesday, investors dumped financial shares, shifting to safer havens like consumer staples companies and government debt. The Dow Jones industrial average fell 96.50, or 1 percent, to 9,241.45. The broader S&P 500 index fell 12.75, or 1.3 percent, to 994.35. It was the biggest drop for both the Dow and the S&P 500 index since July 7.

U.S. stock index futures turned lower, with Dow futures down 12 points, or 0.1 percent, to 9,204.

Oil prices hovered above $69 a barrel after the U.S. and OPEC said global crude consumption will slump this year as economies struggle to emerge from recession. Benchmark crude for September delivery was down 26 cents to $69.19 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange.

In currency dealings, the dollar fell to 95.57 yen in Tokyo late Wednesday from 95.94 yen in New York late Tuesday. The euro fell to $1.4126 from $1.4145.

Associated Press Researcher Bonnie Cao in Beijing and Associated Press Writer Shino Yuasa in Tokyo contributed to this report.

[Associated Press; By ELAINE KURTENBACH]

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