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Asia stocks drop on global growth concerns; Nikkei tumbles 2%

Published 10/10/2012, 03:46 AM
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Investing.com - Asian stock markets were broadly lower on Wednesday, as ongoing concerns over the health of the global economy and its impact on corporate earnings dampened appetite for riskier assets.

Lingering worries over the euro zone’s ongoing debt crisis also weighed.

During late Asian trade, Hong Kong's Hang Seng Index fell 0.3%, Australia’s ASX/200 Index ended down 0.3%, while Japan’s Nikkei 225 Index plunged 2%.

Market sentiment remained under pressure after the International Monetary Fund cut its global growth forecasts earlier in the week to the slowest pace since the 2009 recession, and warned of even weaker expansion unless officials in the U.S. and Europe address threats to their economies.

Investors also remained cautious amid worries over how soon Spain may formally request a bailout and uncertainty over whether international creditors will extend loans to Greece.

In Tokyo, the Nikkei sank to the lowest level in two months, as investors remained concerned over the outlook for global growth and its impact on company earnings.

Automakers came under pressure after confirming a sharp slowdown in demand from China, after a territorial row over a group of disputed islands between China and Japan sparked boycotts and protests.

Toyota shares fell 1.9%, Honda declined 1.15% and Mitsubishi Motors slumped 1.4%.

Elsewhere, in Hong Kong, shares edged lower, but losses were limited amid hopes for fresh easing measures from China’s central bank.

On Tuesday, the People’s Bank of China injected CNY265 billion into the money market, in an effort to ease tight liquidity conditions. It was the second largest daily reverse repo used by the central bank so far.

The move raised optimism for further supportive policy measures out of China, the region’s largest economy.

Meanwhile, in Europe, regional markets were lower after the open, as uncertainty over how soon Spain will formally request a bailout curbed demand for riskier assets.

The EURO STOXX 50 fell 0.35%, France’s CAC 40 shed 0.25%, London’s FTSE 100 eased down 0.2%, while Germany's DAX slumped 0.5%.

Later in the day, Italy was to auction EUR11 billion of short-term government bonds. The country was also to publish official data on industrial production. In addition, Spanish Prime Minister Mariano Rajoy was to hold talks with French President Francois Hollande in Paris.


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