Asian shares decline after Wall Street, Euro zone weighs (MarketWatch) (17-05-2010)

SINGAPORE (MarketWatch) -- Asian stock markets began the week with heavy falls in the wake of the losses on Wall Street Friday and ongoing concerns about troubles in the euro zone. Resource stocks were beaten down in the region as commodities prices fell.

Japan's Nikkei Stock Average was down 2.5%, Australia's S&P/ASX 200 was down 2.5%, South Korea's Kospi Composite lost 2.8%, China's Shanghai Composite Index fell 3.0%, Hong Kong's Hang Seng Index gave up 2.3% and India's Sensex was 2.1% lower. Dow Jones Industrial Average futures were 123 points lower in screen trade.

The euro fell to more than a four-year low against the U.S. dollar, sliding to $1.2234, as persistent concerns over euro zone debt and stop-loss sell orders below $1.2300 pummeled the single currency. "It may be a new week, but there was more than a familiar feel of heightened risk aversion dominating markets. There was little in the way of a specific catalyst for the initial selloff, though stops in euro through the previous $1.2330 low (of October 2008) triggered a run of model-related stops," RBC Capital Markets said in a note to clients.

Resource stocks in the region were hit by the recent falls in commodity prices with BHP Billiton down 4.0%, Rio Tinto off 4.9% and Equinox Minerals down 4.6% in Australia. In Hong Kong, Aluminum Corp of China was off 4.6%, CNOOC fell 3.1% while China Shenhua was off 3.4%, and in Indonesia, Bumi slipped 5.0%.

Thai shares fell 2.5% as an escalating domestic political crisis continued to spiral out of control with no signs of an imminent end. Tensions were running high as street battles between the military and a spreading anti-government movement left around 35 people dead since late last week. Much of central Bangkok has become a no-go zone as armed troops and protesters clash across the Thai capital.

Banks in Australia were hit by concerns that interest margins could continue narrowing on a continued tightness in wholesale funding due to the euro zone's problems. Westpac was down 5.3% after trading ex-dividend while Commonwealth Bank of Australia was 2.4% lower.

In Japan, the euro's weakness was taking a toll on exporters' stocks. "Investors are shocked as they had thought that the worst was over," for the euro, said Kenichi Hirano, strategist at Tachibana Securities. Sony was down 4.1%, Tokyo Electron was down 2.9%.

Spot gold was at $1,237.30 per troy ounce, up $5.90 from late New York trade Friday. June Nymex crude oil futures were down $1.18 at $70.43 per barrel.

Source: MarketWatch