Asian shares pressured by Europe, Korea worries

[December 01, 2010]  BEIJING (AP) -- Most Asian stock markets fell Wednesday amid worries about Europe's debt problems, Korean tensions and disappointing growth in Australia.

Oil prices rose above $84 a barrel amid the release of surveys showing China's manufacturing boom accelerated in November.

Japan's Nikkei 225 index was down less than 0.1 percent to 9,935.86, Hong Kong's Hang Seng index lost 0.4 percent to 22,927.99, and the Shanghai Composite index fell 0.3 percent to 2,812.31.

Australia's S&P/ASX 200 was down 0.3 percent at 4,570.4 after data showed the country's gross domestic product expanded just 0.2 percent in the third quarter from the previous three months.

"Trading is sluggish today. Investors are on the sidelines waiting to see what happens in Korea and the European debt situation," said Linus Yip, a strategist in Hong Kong for First Shanghai Securities.

In China, investors were watching for a possible rate hike to cool inflation, which might slow rapid growth and rein in liquidity that is helping to support share prices.

"At this point, it's a psychological effect on the market," though a rate hike would be "not so damaging," Yip said. "Overall, for mainland China and the Hong Kong market, the outlook is still positive."

Among a handful of gainers, South Korea's Kospi rose 0.7 percent to 1,918.59 as jitters over sporadic skirmishes between the two Koreas eased. Market benchmarks in Taiwan and Bombay also were up.

Meanwhile, surveys released Wednesday showed China's manufacturing recovery accelerated in November. China is a major importer of oil and other raw materials, and stronger manufacturing could help to boost global demand.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 55.2 last month from 54.7 in October and 53.8 in September on a 100-point scale where numbers above 50 indicate rising activity.

A competing index, the HSBC China Manufacturing PMI rose to an eight-month high of 55.3 percent in November, up from 54.8 percent in October.

In New York on Tuesday, the Dow Jones industrial average fell 46.47, or 0.4 percent, to close at 11,006.02.

The Dow was down earlier but recovered some of its losses after President Barack Obama and Republican lawmakers promised to seek a compromise before the end of the year on extending tax cuts adopted during the presidency of George W. Bush.

Some comfort emerged with the news that consumer confidence in the U.S. ratcheted up in November ahead of the crucial Christmas buying season, another sign that the recovery in the world's largest economy is picking up pace.

The Conference Board reported that its main U.S. consumer confidence index rose to a five-month high of 54.1, from a revised 49.9 in October. Analysts were expecting a far more modest rise to 52.

Sentiment dragged as investors sold off government bonds from Spain, Portugal and Italy. The bailout of Ireland's banks has failed to assuage worries that other weak European economies will also need to be rescued.

The broader Standard & Poor's 500 index fell 0.6 percent, to 1,180.55 and the Nasdaq composite index dropped 1.1 percent, to 2,498.23.

Benchmark oil for January delivery rose 7 cents to $84.18 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell $1.62 to settle at $84.11 on Tuesday.

In currencies, the dollar fell to 83.48 from 83.92 late Monday. The euro slid to $1.3008 from $1.3039.

[Associated Press]

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