Asian shares dip after Wall Street sell-off

Associated Press SHARE

By YURI KAGEYAMA, Associated Press

TOKYO (AP) — Asian shares dipped in morning trading Wednesday after the worst sell-off in three months on Wall Street as pessimism about world growth spread across the Pacific.

The Nikkei, the benchmark for the Tokyo Stock Exchange, lost 1.7 percent in early morning trading to 8,935.97. South Korea's KOSPI edged down 0.3 percent, while the Straits Time Index slipped 0.9 percent.

In Tokyo, export-dependent issues were sold on worries about the global economy and the continued strength of the yen, which erodes the earnings of such companies. Toyota shed 1.9 percent, while Murata Manufacturing Co. plunged 3.1 percent.

Masahiro Yamaguchi, a vice president at Mizuho Securities Co. in Tokyo said auto and other export issues were getting hurt because of worries about a slowdown in China, as well as the possible negative impact on exports over a simmering territorial dispute with China over tiny islands.

"It's about the China risk," he said. "The monetary policies are likely helping keep the drop in check, but they weren't enough to keep the rise going."

Political uncertainty in Japan was also adding to cautious sentiments. The main opposition party is choosing a new chief later in the day. The candidates have more assertive policies than the administration in power, which could further deteriorate relations with China.

The ruling party is expected to suffer a serious setback in the next parliamentary elections because of an unpopular tax increase. Discontent about the nation's nuclear power policy has erupted after the Fukushima disasters.

Global stocks had risen earlier in the month as the U.S. Federal Reserve and other monetary authorities came up with measures to boost growth. But the overnight fall in the U.S., echoed in Asia in morning trading, meant people reversing course.

Partly behind the drop was a speech Tuesday by Charles Plosser, president of the Fed's Philadelphia branch of the Federal Reserve, that had said the Fed's effort to support the economy would likely fall short of its goals.

Overnight, the Standard & Poor's 500 index lost 1.05 percent, its fourth straight decline, while the Dow Jones industrial average lost 101.37 points to close at 13,457.55.

In currency trading, the dollar inched up to 77.78 yen early Wednesday from 77.70 yen.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.