Asian stocks fall as outlook for earnings dims

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By ALEX KENNEDY, Associated Press

SINGAPORE (AP) — Asian stock markets fell Wednesday as the global economic slowdown threatens to reduce corporate profits.

Companies start reporting second-quarter results this week and investors were dismayed when chip maker Advanced Micro Devices said Tuesday that weaker sales in China and Europe led to an 11 percent drop in revenue in the April to June period. The company had previously forecast a gain of 3 percent. J.P. Morgan and Google report results later this week.

Meanwhile, investors in Europe were cheered when finance ministers announced they had agreed on the terms of a bailout for Spain's banks and the first installment of $37 billion in aid can be ready by the end of the month.

Europe's debt crisis has hurt investor and consumer confidence, and some of the region's countries, such as Greece and Spain, are in recession. Some analysts say policymakers in the Europe, the U.S. and Asia should implement monetary and fiscal stimulus to prevent global growth from slowing further.

"The eurozone needs dramatic action to stop the downward spiral," said Jan Amrit Poser, chief economist at Bank Sarasin. "The economic cycle in the rest of the world hinges substantially on such intervention, but accompanying actions by central banks in the U.S. and emerging economies are also needed to halt an impending downturn."

Japan's Nikkei 225 index fell 0.4 percent to 8,825.19 and Hong Kong's Hang Seng was off 0.3 percent at 19,345.23.

South Korea's Kospi slipped 0.4 percent to 1,822.39. Australia's S&P/ASX 200 dropped fractionally to 4,097.20 and China's Shanghai Composite shed 0.2 percent to 2,159.75.

The European Central Bank and the People's Bank of China cut lending rates last week. But slowing trade growth in China and weak jobs creation in the U.S. have investors worried that markets could languish until the Federal Reserve implements another round of Treasury bond purchases known as quantitative easing.

"There was nothing to support hope for more quantitative easing," said Tim Condon, head of Asia research at ING. "Eurozone debt crisis anxiety, China growth anxiety and earnings anxiety quickly overwhelmed."

Analysts will be combing the minutes of the latest Fed meeting, scheduled to be released later Thursday, for hints of the central bank's view on the economy and possible policy moves.

On Tuesday, the Dow Jones industrial average closed down 0.7 percent at 12,653.12. The Standard & Poor's 500 fell 0.8 percent to 1,341.47. The Nasdaq composite was down 1 percent at 2,902.33.

Benchmark oil for August delivery was up 47 cents at $84.38 a barrel in electronic trading on the New York Mercantile Exchange. Crude dropped $2.08 to settle at $83.91 on Tuesday in New York.

In currencies, the euro rose slightly to $1.2263 from $1.2254 late Tuesday in New York. The dollar dropped to 79.35 yen from 79.45 yen.

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