- Asian shares dropped, with Japan's stock index falling to a four-month low
- investors dumped risky assets amid growing worries about Europe
- Concerns about Europe increased after Moody's downgraded 16 Spanish banks
Asian shares dropped, with Japan's stock index falling to a four-month low, as investors dumped risky assets amid growing worries about Europe compounded by disappointing US economic data.
The MSCI Asia Pacific index lost 1.5 per cent with Japan's Nikkei 225 Stock Average off 2.2 per cent, Australia's S&P/ASX 200 index down 1.7 per cent and South Korea's Kospi Composite index 2.1 per cent lower.
Concerns about Europe increased after Moody's downgraded 16 Spanish banks and as Greece faces elections in June, which could lead to the country's eventual exit from the euro. Fears of capital flight from Greece were heightened by depositors taking large sums out of Greek banks.
In Tokyo, a stronger yen hurt Japanese exporters although the yen fell back slightly, down 0.2 per cent to Y79.45 per US dollar, on fears that the Japanese authorities might intervene in the currency market.
Automakers slid with Honda Motor off 3.3 per cent, Toyota Motor down 3.3 per cent and Mazda Motor 2.7 per cent lower in Tokyo. Hyundai Motor dipped 2.7 per cent and its affiliate Kia Motors dropped 3.1 per cent in Seoul.
Other exporters were also weaker with Samsung Electronics, which derives a fifth of its revenue from the US, losing 3.3 per cent in Seoul, while Sony slid 3.8 per cent and Nintendo fell 3 per cent in Tokyo. Japanese machinery makers also dropped after sales growth slowed at Caterpillar, the largest maker of construction and mining equipment. In Hong Kong, Esprit Holdings, a clothier that depends on Europe for most of its sales, plunged 4.9 per cent.
Resources stocks were under pressure amid the uncertain global economic outlook. Japanese steelmakers were among the loss leaders with JFE Holdings off 4.4 per cent and Kobe Steel down 4.8 per cent. Australian miners also lost ground with iron ore miner Fortescue Metals Group tumbling 6.1 per cent and Rio Tinto plunging 4.3 per cent. In Hong Kong, Aluminum Corp of China slid 4 per cent.
Banks were lower across the board on European concerns with Nomura Holdings sliding 4.2 per cent and Mitsubishi UFJ Financial Group dropping 2.6 per cent in Tokyo. In Sydney, Westpac Banking declined 2.7 per cent and National Australia Bank fell 2.1 per cent. HSBC declined 3.7 per cent in Hong Kong while Industrial & Commercial Bank of China and China Citic Bank each fell 0.9 per cent in Shanghai.
Chinese stocks dropped with Hong Kong's Hang Seng index off 2.3 per cent and China's Shanghai Composite index 0.6 per cent lower. In Hong Kong, China Mobile lost 2.1 per cent and New World Development slid 4.3 per cent while Cathay Pacific fell 4.9 per cent.
Earlier, the S&P 500 fell to its lowest level since January. The broad measure of US stocks may fall further on Friday as futures declined in extended trading hours, sending the S&P 500 below the 1,300 mark.
Meanwhile, the yield on US 10-year Treasuries pulled back to 1.69 per cent and Bund yields at one point hit a new record low of 1.42 per cent.
The US Treasury also sold inflation-protected securities, or Tips, on Thursday at a record negative yield.
And in other stock news, Facebook priced its shares at $38 each in an initial public offering, raising $16bn and valuing the world's largest social networking group at $104bn. The eight-year-old company now ranks alongside the top 25 public companies in the US.