SINGAPORE (Dow Jones)--Asian stock markets ended Friday lower with banks in Hong Kong and on the mainland down on concerns over more potential interest rate increases by Beijing as well as renewed concerns over Europe's sovereign debt. The Shanghai Composite Index fell 5.2% to 2985.44, Hong Kong's Hang Seng Index gave up 1.9%, Japan's Nikkei Stock Average lost 1.4%, Australia's S&P/ASX 200 declined 0.8%, South Korea's Kospi slipped 0.1%, Taiwan's Taiex slid 1.4% and India's Sensex fell 2.1%. Dow Jones Industrial Average futures were down 46 points in screen trade, pointing to a weak opening. Bank shares in both Hong Kong and China were lower after official data released Thursday showed China's consumer price index jumped by a more than expected 4.4% in October from a year earlier, boosting expectations for aggressive monetary tightening in coming days to battle rising inflation. A 21st Century Business Herald report Friday cited unnamed sources as saying the People's Bank of China will raise the reserve requirement ratio for several banks by an additional 50 basis points on top of its decision Wednesday to hike the ratio for all banks by the same amount. "Investors are in a rush to lock in profits as they are concerned the central bank may launch more tightening measures over the weekend," said Wu Dazhong, an analyst at Shenyin Wanguo Securities. Also weighing on banks, the cost of insuring sovereign debt issued by Portugal, Ireland, and Spain using credit default swaps hit record highs Thursday. "The European periphery sovereign debt crisis is returning as a major global markets risk. At this stage the contagion is still moderate, but it is building," said Greg Gibbs, currency strategist at RBS in Sydney. In Hong Kong, BOC Hong Kong was 4.3% lower, China Construction Bank fell 3.8%, ICBC declined 3.1% and HSBC was 2.7% lower. On the mainland, Bank of Communications fell 6.0% and China Everbright Bank plummeted 8.5% after the report from the 21st Century Business Herald named both as among the banks required to park more cash with the central bank. China's benchmark stock index dropped for its biggest loss in 14 months. Aside from banks, Chinese property developers also declined as the state-run Securities Times cited an unnamed sources saying that China has limited investment by foreign companies in the domestic real-estate market to commercial property that must be designated for their own use. China Vanke was down 7.1% and Poly Real Estate Group was 7.3% lower. In South Korea, securities stocks were lower after the Financial Supervisory Service said Friday it started a joint investigation with the Korea Exchange to examine heavy selling of Korean stocks by Deutsche Bank on Thursday. Deutsche Bank wasn't immediately available for comment. "The domestic investors were shocked by (Thursday's) huge losses and have grown more wary; Thursday's fall may continue to weigh on sentiment," said Shinhan Investment analyst Lee Sun-yup. The index ended down 2.7% at 1914.73 on Thursday. Woori Investment & Securities lost 4.7% and Samsung Securities tumbled 5.5%. In Sydney, shares of Australia & New Zealand Banking Group fell 2.1% on speculation of a potential capital raising by the bank if it purchases a 57.27% stake in Korea Exchange Bank. KEB shares rose 0.8% in Seoul. National Australia Bank, which was trading ex-dividend, fell 3.5%. In Tokyo, chip-related shares fell after Disco Corp plunged 14.0% after it slashed its fiscal year net profit outlook to Y9.5 billion from Y12.6 billion on a lower sales target for precision cutting equipment. Tokyo Electron fell 3.5% and Advantest lost 2.9%. Among other markets, New Zealand's NZX-50 gave up 0.6% and Philippine shares ended 1.6% lower. Singapore's Straits Times Index lost 1.3%, Indonesian shares tumbled 2.1% and Thailand's SET Index shed 1.1%. In foreign exchange markers, the euro was able to recoup its earlier losses after European Union finance ministers played down suggestions that the private sector would be involved in any permanent resolution to the euro zone's debt problem. The ministers said: "We are clear that this does not apply to any outstanding debt and any program under current instruments. Any new mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements." Their clarification came amid talk the EU could well launch a bailout for Ireland to prevent a contagion of its funding problems to other peripheral countries. The single currency fell as low as $1.3573 in early Asian trade, and was recently fetching $1.3685 from $1.3662 late Thursday in New York. It was also buying Y112.43 from Y112.68, while the dollar was at Y82.12 from Y82.48. Lead December Japanese government bond futures rose 0.17 to 142.59 points. The benchmark 10-year JGB yield was down 0.5 basis point at 0.995%. Spot gold was at $1,385.90 per troy ounce, down $23 from its New York close on Thursday. Nymex January crude-oil futures were off $1.67 at $86.12 per barrel. -Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com

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