Asian stocks fall on fears over oil, US
By JEREMIAH MARQUEZ,AP
Posted: 2008-06-27 02:06:46

HONG KONG (AP) - Asian stock markets tumbled Friday after Wall Street plunged overnight and crude oil spiked above $140 a barrel for the first time, reigniting fears of a global economic slowdown.

Key stock indices in Japan, Taiwan and South Korea all shed more than 2 percent. Shanghai's benchmark plunged nearly 4.5 percent and India's was down 4.3 percent in early trade.

The losses came after U.S. stocks sank Thursday, with the Dow Jones industrial average declining more than 3 percent to its lowest level in almost two years.

Investors reacted nervously to a wave of dismal news about several sectors of the American economy, a vital export market for Asia. Analysts downgraded General Motors Corp., Citigroup and Merrill Lynch & Co., while disappointing forecast from Oracle Corp. and BlackBerry maker Research In Motion Ltd. forecasts rattled investors about the tech industry.

Worries about inflation grew after crude oil futures jumped above $140 Thursday after OPEC's president said prices could go past $150 a barrel this year and Libya said it may cut oil production.

"We've still got bad news on the credit crunch, we've got bad news about consumers," said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. "The macro environment is not a good one and people are very risk averse."

In Japan, the benchmark Nikkei 225 index was down 2.2 percent to 13,515.12 midday Friday, on its way to what would be a seventh straight session of falls. The damage was wide spread across all sectors, with financials hit especially hard. Megabank Mitsubishi UFJ was down 3.1 percent.

The decline in Tokyo also came after a bevy of indicators showed that soaring oil and commodity prices were fanning inflation and causing consumers to hold back from spending.

India's Sensex was down 4.3 percent at 13,807 as investors worried about inflation that has risen to 13-year highs and that recent interest rate hikes would temper consumer spending.

"Sentiment is bearish. There are fears that crude will touch $180, this is a worry that cannot be stamped out easily," said Gul Tekchandani, a Mumbai-based investment adviser. "Few can stomach this volatility, plus there are weak global cues with the U.S. economy also down."

In Hong Kong, crude's new record took a toll even though oil eased somewhat to below $139 in Friday trade in Asia. The blue-chip Hang Seng Index was down 1.8 percent to 22,054.84.

Refiner China Petroleum & Chemical Corp, or Sinopec, lost 4.2 percent, and airline Cathay Pacific was down 3.3 percent.

Associated Press writer Ramola Badam Talwar in Mumbai contributed to this report.

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