Bank stocks lead drop in Asian markets

Business Materials 20 February 2008 09:37 (UTC +04:00)

( FT )- Asian equities failed to hang on to the upbeat mood on Wednesday with Credit Suisse's unexpected $2.8bn loss weighing on banking stocks and as concern grew over the impact of higher oil prices amid signs of a global economic slowdown.

Markets were down across the board in morning trading. The Nikkei 225 stock average opened for the afternoon session sharply down 2.1 per cent at 13,271.16, while the broader Topix dropped 2.2 per cent to 1,316.02.

Fanuc, maker of factory robots, led the decline in Tokyo, dropping 3.7 per cent to Y9 ,850 .

Many of the companies that had enjoyed rallies in their share prices on Tuesday were down again on Wednesday. TDK (NYSE:TDK) dropped 3.9 per cent to Y7 ,740 , Toyota (NYSE:TM) slid 3.5 per cent to Y6,090, and Honda Motor (NYSE:HMC) declined 2.6 per cent to Y3,320. The yen recently traded at 108.18 against the dollar.

Hong Kong's Hang Seng index was down 1 per cent at 23,880.38, while the index of mainland Chinese shares traded in Hong Kong dropped 1.1 per cent to 13,814.43.

In Shanghai, shares were down 1.1 per cent at 4,611.54. China's Bank of Communications slid 2.7 per cent to HK$9.48, while HSBC fell 0.4 per cent to HK$114.

Japanese banks managed to fight off declines in morning trading but followed Hong Kong down in the early afternoon. Mitsubishi UFJ declined 2.3 per cent to Y939, while Mizuho slid 2.5 per cent to Y438 ,000 .

Australian banks' brief respite was also limited to Tuesday's trading and investors continued to sell those shares, taking the S& P ASX index down 0.9 per cent to 5,565.3. Commonwealth Bank of Australia was down 1.6 per cent to A$44.53, National Australia Bank (NYSE:NAU) slid 1.8 per cent to A$29.92 and Macquarie Group fell 4 per cent to A$54.50.

Higher oil prices had a mixed impact on stocks. Power utilities, which face higher costs as energy prices rise, dropped in Tokyo. The direction of those stocks weren't helped by a news report that LNG importers in Japan could face an extra $3.5bn in costs. Tokyo Electric dropped 1.6 per cent, while Kansai Electric slid 2.4 per cent.

On the other hand, producers of LNG and other energy commodities such as Woodside Petroleum from Australia were boosted by higher oil prices. The Australian company rose 4.6 per cent to A$53.60. It also said it would lift its production target for the year, providing a boost to investors that offset the fall in profit it also reported.

Back in Hong Kong, oil and gas exploration and producer CNOOC, jumped 2.4 per cent, while PetroChina (NYSE:PTR), which also has an oil and gas exploration business advanced 0.7 per cent.

Back in Tokyo, the shares of trading companies, which have investments oil and gas fields, fared less well, after the hefty gains of Tuesday's trading. Mitsubishi Corp fell 2.4 per cent to Y3 ,210 .

Sony (NYSE:SNE) shares advanced for the third day this week after Toshiba dropped out of the battle with Sony to create the next-generation DVD format by saying it would stop making high-definition DVDs. Sony shares advanced 2.4 per cent to Y5,120, while Toshiba shares fell 2.8 per cent to Y801.

Platinum fell close to 3 per cent, partly as investors took some profits after the metal reached new records on Tuesday.