Asian shares ended lower Tuesday, with many regional markets weighed down as Shanghai stocks retreated sharply to close at a 14-month low on concerns that China's economy could slow down in coming months.
Japan’s Nikkei 225 average fell 123.27 points, or 1.3%, to 9,570.67
Hong Kong’s Hang Seng index collapsed 477.78 points, or 2.3%, to 20,248.90
Japanese shares were also hit as a sharp fall in the euro and the U.S. dollar against the yen dragged on the nation's exporters, while resource stocks stumbled across the region on concerns about the demand outlook.
European shares opened on a weak note, while U.S. index futures pointed to a solidly lower start, with the Dow Jones Industrial Average futures down 117 points in screen trade.
In Tokyo, shares of exporters lost ground on the yen's strength.
Casio Computer fell 3.8%, while Isuzu Motors lost 2.5% and Fanuc dropped 2.2%.
A few other exporters with high exposure to the euro zone outperformed the Tokyo market despite the European currency's decline against the yen, supported by hopes earnings will be better than previously expected. Sony rose 0.2% and Nikon fell 0.3%.
However, shares of Li & Fung tumbled 4.8% in Hong Kong after UBS downgraded the supplier to global retailers such as Wal-Mart Stores to a sell rating from neutral previously, citing weaker orders from Europe.
Taiwanese shares also surrendered early gains as investors locked in profits in the banking and transportation sectors, which had recently risen ahead of the expected signing Tuesday of a wide-ranging Taiwan-China trade pact.
The agreement would reduce tariffs and open Chinese service sectors to Taiwan.
While the trade pact is a long-term positive for Taiwan, the stocks' moves likely are reflecting short-term gains, said Polaris Securities head of research Kenner Wang. Cathay Financial Holding lost 2.2% and China Airlines fell 3.7%.
Resource-linked shares sank broadly, with BHP Billiton dropping 1% and Woodside Petroleum skidding 1.6% in Sydney, Inpex shedding 3.8% and trading house Mitsui & Co. losing 3.2% in Tokyo, and Cnooc Ltd. tumbling 3.6% in Hong Kong.
Another big mover Tuesday was engineering and infrastructure services firm Downer EDI, down 6.3% in Sydney. The company disputed media claims Tuesday that it was manipulating its working capital to boost fiscal year-end accounts, and said it retains "ample liquidity" with more than 600 million Australian dollars ($516 million U.S.) in cash and available debt facilities.
But Asiana Airlines, bucking the bearish trend in Seoul, gained 5.2%, as the carrier's shares played off expectations of strong earnings.
In foreign-exchange markets, a spike in risk-aversion following the sharp losses in China shares pulled the U.S. dollar and the euro down against Japan's yen.
The euro was buying 107.92 yen from 109.78 yen late in New York on Monday, and the dollar was at 88.59 yen, compared with 89.41 yen. The single currency was fetching $1.2189 U.S. from $1.2276 U.S.
CHINA
Chinese property, airline and metal stocks fell on concerns about a slowdown in the mainland's economy.
Shanghai’s CSI 300 Index dumped 124.76 points, or 4.6%, to 2,592.02
Gemdale shares slumped 9.9% and Poly Real Estate Group dropped 7.1%, while Jiangxi Copper tumbled 7% and Hainan Airlines plummeted 8.8% in Shanghai.
The drop came after New York-based Conference Board said its leading economic indicator for China rose 0.3% in April, correcting a previous reading of a 1.7% increase and attributing the earlier reading to a calculation error. The 0.3% reading represents a sharp fall from the 1.2% rise recorded in March.
Analysts also cited concerns over pricing for the domestic part of Agricultural Bank of China's initial public offering, with the range coming in slightly lower than expected.
Among lenders, China Construction Bank dropped 3.5% and China Merchants Bank fell 3.6%, but they outperformed the benchmark index.
Elsewhere;
Singapore’s Straits Times Index subsided 39.65 points, or 1.4%, to 2,830.34
Korea’s Kospi index fell back 24.27 points, or 1.4%, to 1,707.76
Taiwan’s Taiex Index moved lower by 77.22 points, or 1%, to 7,423.57
New Zealand’s NZX index shed 17.34 points, or 0.6%, to 2,991.07
Australia’s S&P/ASX 200 took off 38.80 points, or 0.9%, to 4,345.70
