[NYTr] Asian Markets Tumble After U.S. Sell-Off

[All the News That Doesn't Fit]

AP - Aug 29, 2007
http://hosted.ap.org/dynamic/stories/W/WORLD_MARKETS?SITE=ORLAG&SECTION=HOME&TEMPLATE=DEFAULT

Asian Markets Tumble After U.S. Sell-Off

TOKYO (AP) -- Asian markets dropped Wednesday following a plunge on
Wall Street amid simmering concerns over global credit market turmoil
and fears the U.S. Federal Reserve won't do enough to ease a credit
crunch. European markets, meanwhile, were mixed in early trade.

Asian markets pared losses as the day progressed, with Korean shares
recovering nearly completely, suggesting a measure of investor
confidence.

Japan's Nikkei 225 index was 1.7 percent lower at the close after
dropping as much as 2.8 percent earlier in the day. Hong Kong's key
index was down 1.5 percent at its close after losing as much as 2.9
percent. And South Korea's benchmark finished just 0.2 percent lower
after dropping as much as 3.1 percent.

In early European trade, the U.K.'s FTSE 100 and France's CAC 40 were
both up 0.34 percent, while Germany's DAX was down 0.5 percent.

In New York Tuesday, the Dow Jones industrial average sank 280.28, or
2.10 percent, to 13,041.85, its biggest drop since Aug. 9. Investors
grew more uneasy about whether the Fed, the U.S. central bank, will
take the steps needed to prevent credit market problems from spreading
further.

Global markets have been volatile in recent weeks as rising defaults on
U.S. subprime mortgages has hit some brokerages and hedge funds that
held mortgage-backed securities and made banks less willing to lend
money.

"Everyone is scared. It's like walking in the dark because we have yet
to get the full picture of the subprime loan problems," said Shoji
Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ
Securities Co. in Tokyo.

Worries about a slowdown in the U.S. economy - a key Asian export
market - heightened after a report Tuesday said U.S. consumer
confidence sagged in August.

Investors in the U.S. were disappointed that minutes from the Fed's
last meeting Aug. 7, released Tuesday, didn't discuss a cut in the
benchmark federal funds rate. The meeting predated a number of actions
taken by the central bank to try to alleviate market turbulence,
including the Aug. 17 lowering of the discount rate, the interest the
Fed charges banks to borrow money. But Wall Street seems to be growing
more dissatisfied because the Fed has not yet lowered the funds rate.

Yoshikoshi said share prices will remain volatile until mid-September
or October. Players are now investing in bonds in Japan, Europe and the
U.S., considering them safer than shares, he said.

"But that is only temporary and once we get the full picture of the
problems, investors will return to stocks," he said.

The market volatility also strengthened the yen as investors backed
away from yen-carry trades. To exit the trades, investors have to buy
yen to repay cheap yen loans. The dollar was trading at 114.37 yen at
4:50 p.m. (0750 GMT), down from 114.56 yen Tuesday in New York.

The yen's strength in turn caused traders to dump exporters like Toyota
Motor Corp. and Sony Corp., which fell 2.0 percent and 2.8 percent,
respectively. The stronger yen makes Japanese exports more expensive
and less competitive overseas.

In South Korea, Samsung Electronics Co., the country's biggest
corporation, fell 2.4 percent, and Hyundai heavy Industries Co., the
world's largest shipbuilder, rose 2.0 percent. A second shipbuilder,
Daewoo Shipbuilding & Marine Engineering company, gained 4.9 percent,
and helped lift the Korea Composite Stock Price Index, or Kospi, from
its early morning lows.

Major indices fell in Australia, China, Indonesia, New Zealand, the
Philippines, Singapore, Taiwan and Thailand.

© 2007 The Associated Press.