SINGAPORE (Dow Jones)--Asian stock markets were mostly lower Monday as investors fretted about the possibility of contagion from the Greek debt crisis, with many of the regional oil and financial stocks taking a beating.
Japan's Nikkei Stock Average down 0.9%, Australia's S&P/ASX 200 fell 1.1% to 4457.30, while South Korea's Kospi Composite was 1.0% lower. The Shanghai Composite Index was up 0.4%, Hong Kong's Hang Seng Index lost 0.7%, and India's Sensex fell 0.1%.
Dow Jones Industrial Average futures were down 34 points in screen trade.
The mood in regional markets was subdued amid euro-zone debt concerns after news Friday that Moody's Investors Service was considering downgrading the creditworthiness of a group of banks in Italy stoked contagion fears. Worries ahead of a key vote on austerity measures in Greece later this week also dented risk-appetite.
"We have seen this pattern before of Greece's debt problems spilling over into neighboring countries such as Spain and Italy so we still need to be cautious about Europe's sovereign debt risk," said Yutaka Miura, a senior technical analyst at Mizuho Securities in Tokyo.
Regional energy stocks succumbed to selling due to weak oil prices with August Nymex crude oil futures recently trading down 90 cents at $90.26 per barrel on Globex. Woodside Petroleum was off 0.9% and Santos lost 1.1% in Sydney, Japan Petroleum Exploration was down 1.8% in Tokyo and S-Oil fell 1.5% in Seoul.
Major banks were also lower in the region after international regulators agreed to require the world's biggest banks to hold between 1.0% and 2.5% of extra capital--on top of a base 7% capital requirement that was agreed upon last year. Mitsubishi UFJ Financial Group fell 1.3% in Tokyo, HSBC lost 1.5% in Hong Kong and in Sydney National Australia Bank fell 1.3%.
In Japan, the yen's strength against the euro hurt exporters' stocks as many of the country's exporters have sizable exposure to Europe.
Sony was down 1.4%, Olympus lost 1.2% and Canon fell 0.7%.
Tokyo Electric Power rose 3.9% after the utility company said over the weekend it will Monday start reusing contaminated water as a coolant at its damaged Fukushima Daiichi nuclear plant.
Shares in China received a boost after comments Premier Wen Jiabao suggested the urgency around further tightening measures from Beijing may be receding. Wen said on Hong Kong's Television Broadcasts Ltd. in London that it will be hard to keep the country's inflation rate under 4.0% this year, but it's possible to cap it below 5.0%.
"Premier Wen's comments have eased some lingering concerns over inflation, giving hope that policymakers could ease monetary tightening policy after June," said Li Lei, analyst at Gold State Securities.
Among big-cap gainers, Offshore Oil Engineering jumped 4.4%, and Jiangxi Copper gained 0.3%.
In Seoul, Korea Express rose 2.9% ahead of the final round of bidding for a controlling stake in the logistics company.
Shares of Murchison Metals were suspended Monday in Sydney ahead of the release of its feasibility study in the Oakajee iron ore port and rail development project. Murchison opened the door earlier Monday for Chinese investors to join the Oakajee project after conceding it is finding it difficult to fund its own share of the A$5 billion-plus project.
Elsewhere in the region, Taiwan's main index fell 0.4%, Singapore's Straits Times Index lost 0.7%, while Thai shares fell 0.7% and New Zealand's NZX-50 was down 0.4%. Malaysia's KLCI index fell 0.1%, Indonesian shares declined 0.7% and Philippine shares fell 0.1%.
In foreign exchange markets, heightened risk-aversion drove the U.S. dollar broadly higher. The euro remained under pressure as traders kept a wary eye on euro-zone debt woes and potential contagion after the Moody's announcement on Friday put a spotlight on Italy's financial system. Worries that Greece's debt crisis may be spreading outside of its borders have heightened risk-aversion.
The euro was fetching $1.4129 against the U.S. dollar, from $1.4192 late Friday in New York, and Y114.02 against the yen, from Y114.12. The dollar was at Y80.70, compared with Y80.43.
The risk-sensitive Australian dollar fell to its lowest levels since April 13 against the greenback at US$1.0427, and was recently at US$1.0441.
"The fortunes of the U.S. dollar will be determined largely by the mood in the euro zone, as the U.S. dollar is now fulfilling the role of 'not being the euro,' capitalising on any bad news and retreating when the market gets more hopeful," Credit Agricole said in a note to clients. "This has lent it more of a safe-haven status recently in relation to peripheral stories."
September Japanese government bond futures were up 0.17 at 141.48 points, while the 10-year cash JGB yield was down 0.5 basis point at 1.100%, led by the Nikkei's weakness.
Spot gold was at $1,499.80 per troy ounce, down $2.50 from its New York settlement on Friday.
-Shri Navaratnam, Dow Jones Newswires; +65-6415-4142; shri.navaratnam@dowjones.com
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