Asian stocks slump on China, eurozone worries

HONG KONG, (AFP) - Asian stocks fell on Wednesday on worries about likely Chinese anti-inflationary measures and the eurozone debt crisis, with a rush to buy the safe-haven dollar helping pressure commodity stocks.

Tokyo’s Nikkei index was down 0.52 percent in the morning, Sydney’s S&P/ASX 200 was down 1.41 percent, Hong Kong’s Hang Seng was down 0.68 percent and Shanghai’s Composite index was down 0.89 percent.

The declines followed a plunge on Wall Street on Tuesday, where the Dow Jones Industrial Average dropped 1.59 percent, the broader S&P 500 lost 1.62 percent and the tech-rich Nasdaq slid 1.75 percent.

Comments by Chinese Premier Wen Jiabao heightened fears of a clamp-down on the Chinese economy to restrain prices after a 4.4 percent year-on-year jump in the consumer price index for October.

“Great attention should be paid to market supply and demand and prices because they are related to the public’s basic interests,” Wen was quoted as saying in a statement late Tuesday. “The State Council is formulating measures to curb the overly fast rises of prices.”One Hong Kong-based fund manager told Dow Jones Newswires: “The inflation genie is out of the bottle. This is definitely not something that Beijing will pussyfoot around on... That trumps other priorities as the spectre of rampant food inflation and the masses at the palace gates are their worst nightmare.”Mainland Chinese property developers and resource firms led the falls on the Hong Kong and Shanghai markets. Shanghai’s Composite Index was down about nine percent from its close on Thursday and Hong Kong down nearly five percent.

Adding to market pressures was the eurozone debt crisis, as the European Union and International Monetary Fund announced an urgent mission to Dublin to finalise emergency support for Ireland’s devastated banking sector.

However analysts in Tokyo said it was not all doom and gloom, as some Japanese firms have begun to look healthier -- financial groups MUFG and Mizuho Financial have moved to buy foreign assets in recent weeks -- and a stronger dollar supports the country’s exporters.

“Even if the Chinese economy slows down slightly, the impact on Japan’s corporate earnings will be limited if the dollar trades firmly,” said Okasan Securities strategist Hideyuki Ishiguro.

Yutaka Yoshii of Mito Securities said the Tokyo market’s appeal may rise as “investors are starting to focus on Japanese stocks since they have been outperforming other major markets from earlier this month after lagging for so long”.

However resource-linked stocks fell in Tokyo, as elsewhere, reflecting worries about possible lower demand from China and the fact that a higher dollar makes commodities more expensive for holders of other currencies.

Oil distributor Showa Shell Sekiyu was down 2.69 percent and Mitsubishi Corp was off 1.18 percent in Tokyo.

The euro fell against the dollar in Asia, staying close to seven-week lows at 1.3475 dollars in Tokyo morning trade, compared with 1.3488 dollars in New York late Tuesday, while staying almost flat at 112.40 yen.

The dollar firmed to 83.42 yen from 83.28 yen.

Oil prices were mixed, with New York’s main contract, light sweet crude for December delivery, up just three cents at 82.37 dollars a barrel and Brent North Sea crude for January off 13 cents at 84.60 dollars.

Gold opened at 1,337.00-1,338.00 US dollars an ounce in Hong Kong, down from Tuesday’s close of 1,360.00-1,361.00 dollars.