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Asian stocks fall amid unease about US budget

Source : AP
Last Updated: Tue, Feb 26, 2013 03:30 hrs

Asian stock markets fell Tuesday amid anxiety about impending U.S. government spending cuts and the uncertain outcome of Italy's general election.

Oil dropped below $93 a barrel on concern about possible setbacks in all the major economic regions.

Japan's Nikkei 225 shed 1.4 percent to 11,502.30 while China's benchmark Shanghai Composite Index added 0.2 percent to 2,329.07. Hong Kong's Hang Seng lost 0.6 percent to 22,693.86 and Taipei, Seoul and Sydney also suffered declines.

Investors were spooked by the specter of automatic U.S. spending cuts that hit this week and political instability in Italy following a general election.

In Asia, Chinese markets have drifted after Beijing ordered new efforts to cool housing prices, prompting fears of tighter monetary policy that might slow a gradual economic recovery. Investors also were dismayed by a survey that showed February factory activity slowing.

"As all three major economic areas face uncertainty, risk aversion has returned," said Credit Agricole CIB economist Dariusz Kowalczyk in a report.

Markets were volatile Monday amid uncertainty about the outcome of Italy's election. Exit polls suggested a center-left coalition might be able to form a government. But later polls showed a center-right group led by former Premier Silvio Berlusconi might win control of the upper house — a scenario that might produce political deadlock and force new elections.

Berlusconi has promised to roll back some of the austerity measures introduced by technocrat prime minister Mario Monti. Heavily indebted Italy's stability is considered crucial to the future of the euro currency bloc and European leaders want Rome to enforce Monti's spending controls.

On Wall Street, the Dow fell 216.40 points, or 1.6 percent, to 13,784.17, its biggest drop since Nov. 7. The S&P 500 fell 27.75 points, or 1.8 percent, to 1,487.85, falling below 1,500 for the first time in three weeks. The Nasdaq composite dropped 45.57 points, or 1.4 percent, to 3,116.25

In China, investors were dismayed when HSBC Corp. said Monday a preliminary version of its purchasing managers index showed Chinese manufacturing unexpectedly fell in February to a four-month low and export orders declined.

China is recovering from its deepest slowdown since the 2008 but analysts say the rebound will be gradual and could be jeopardized if trade or investment falls.

Investors also are awaiting new U.S. data and remarks by Federal Reserve chairman Ben Bernanke.

Last week, minutes from the Fed's latest policy meeting showed concern over monetary stimulus, stoking jitters in the markets.

In currency markets, the dollar weakened to 92.55 yen from the previous day's 92.59.

The yen has fallen by about 20 percent in recent weeks, helping to boost the Nikkei on hopes of stronger exports.

Benchmark crude for April delivery was down 57 cents to $92.54 in electronic trading on the New York Mercantile Exchange. The contract settled Monday at $93.11.




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