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War fears, oil drive Asia lower
TOKYO, Japan -- Asian stock markets dived as war fears and soaring oil prices sent investors running for cover Monday after the U.S. gave world diplomacy an improbable one-day deadline before taking military action against Iraq. By noon local time Japan's leading Nikkei index had plunged to near the 20-year low touched last week, led by Mizuho Financial Group Inc and other banks. Mizuho slid 7.85 percent to 98,600 yen, helping push the Nikkei average down 1.01 percent or 80.73 points to 7,921.96. The broader Topix index lost 0.88 percent to 779.13. "Lots of people are saying global markets will rally once the war starts, but I don't think the advance will be that strong," Ken Masuda, a senior dealer at Shinko Securities, told Reuters news service. "The problem is that the U.S. economy will not recover, and that demand will be weak there for some time to come." Reflecting those concerns, chip equipment giant Tokyo Electron Ltd gave up 3.66 percent to 4,740 yen, and Canon Inc, the world's largest office machine maker and another major exporter, fell 1.19 percent to 4,140 yen. Bush's ultimatum pushed down the U.S. dollar to 117.88 yen in Asian trade compared with 118.30 in late New York trade on Friday. A stronger yen cuts into the value of exporters' profits earned abroad. A jump in oil prices fueled by war fears also hurt Asian markets, with many of the region's nations heavily dependent on oil imported from the Middle East. Crude oil futures charged one dollar higher in electronic trading in Asia on the New York Mercantile Exchange, after ending Friday sharply lower on speculation any war with Iraq would be short and sharp, limiting supply disruptions. U.S. light crude jumped $1.24 to $36.62 a barrel by 0245 GMT from Friday's close in New York. Crude has rallied about 20 percent this year as Bush stepped up a campaign to disarm Iraq by force if necessary. Traders fear war may disrupt supplies from other producers in the Middle East, which pump about 40 percent of globally-traded oil. South Korean shares were down sharply percent and most other Asian markets were lower in morning trade, with a start of an Iraq war appearing imminent. In Seoul, the key Kospi indicator was down 3.6 percent to 518 amid tensions with North Korea and a string of corporate scandals involving major companies such as Hyundai Engineering and Construction Co, Hynix Semiconductor and SK Group. Hong Kong's Hang Seng index reflected the regional gloom, off 1.6 percent at 8816 around midday. Further south, Australia's S&P/ASX 200 indicator was off 0.8 percent by mid-afternoon at 2732.20. Key stocks to suffer include international media player News Corporation, off A22c to A$10.03 and widely-held banking stock CBA, down A34c to A$23.32. Across the Tasman, the NZSE Top 50 index shed 0.6 percent to 1870.92 .92 as trading drew to a close for the day. Leading stock Telecom New Zealand lost NZ4c to NZ$4.18. Elsewhere, Singapore's Straits Times marker lost 1.2 percent in early business to 1235 while in Taiwan the Taipei Weighted index shed 1.7 percent to 4402. Reuters contributed to this report.
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