Asian Shares Fall As Cyclical Stks Drop; NEC Elec Pressured

SINGAPORE -- Asian share markets were solidly lower Thursday after large declines on Wall Street sapped investors' appetite for risk, with the Australian market hitting three-week lows and NEC Electronics slumping in Tokyo on its downbeat earnings report.

Japan's Nikkei 225 was down 1.9% with Australia's S&P/ASX 200 off 1.8% and South Korea's Kospi Composite down 2.3%, while New Zealand's NZX-50 was off 0.7%. Taiwan shares fell 2.0% with Singapore's main index off 1.3%.

"The correction in U.S. stocks this time may last longer. Both U.S. and Japanese markets are now more concerned about economic recovery prospects," said Mizuho Securities market analyst Yukio Takahashi in Tokyo.

DBS Vickers strategist Yeo Kee Yan said concerns about a rising U.S. dollar - as a safe-haven play - were also a factor. "We have seen the hot money flowing into Asia and commodity plays recently, but if the U.S. dollar rises, these dollar carry trades will unwind."

The euro briefly fell in Asia to it lowest level against the U.S. dollar since October 14, with the Australian dollar also on the decline against the greenback, alongside emerging market currencies like the Korean won and Malaysian ringgit.

In Australia, cyclicals suffered broad-based declines. Banking stocks were also under pressure with ANZ down 1.9% despite above-consensus results, while Macquarie gave up 2.1%. ANZ's full year net profit fell 11% on year, but the bank showed increasing confidence that loan losses were beginning to stabilize.

NEC Electronics was ask-only in Tokyo at a limit-down level of Y650, after its net loss for the fiscal second-quarter widened on year and the company said it now expected a much wider loss for the full business year.

Advantest meanwhile fell 6.8% after the the specialist in testing systems for memory chips posted a net loss of Y3.30 billion for the fiscal second quarter, as cost cuts and other steps failed to offset a slump in sales.

Trading houses were also weak, with Mitsui & Co. down 4.1% and Sumitomo Metal Mining off 3.2%.

There was heavy selling of Korean shares by foreign investors. Hyundai Steel fell 6.7% after the company said it would cut hot-rolled coil prices from November 1 due to a drop in prices of steel scrap and imports, while SK Energy shed 5.8% on news of a 46% on-year drop in third quarter net profit.

In New Zealand, blue-chip stocks fell even as the Reserve Bank of New Zealand, in keeping interest rates at a record low 2.5% and switching from an easing to neutral monetary setting bias, had a more dovish tone in its accompanying statement than expected.

Fletcher Building was off 1.6%, but medical equipment maker Fisher & Paykel Healthcare gained 3.0% as the New Zealand dollar weakened.

On the data front, Japan industrial output rose for the seventh consecutive month in September, highlighting that the export dependent economy continued to emerge from its worst recession in decades on the back of overseas demand for Japanese cars, electronics, other-high end products.

In currency markets the euro remained under pressure, at $1.4697 against the U.S. dollar after falling as far as $1.4683, from $1.4704 late in New York, with the single currency at Y133.12 against the Japanese yen, from a low of Y132.81 and Y133.55 in New York.

The U.S. dollar briefly fell against the yen to its lowest level since October 20 - at Y90.40 - but more recently was at Y90.56, from Y90.82 in New York.

But traders didn't expect the euro's fall to last. "I believe the decline is due to position adjustments because the pace of the euro rising above $1.5 was astonishingly fast. I don't think this declining momentum will last long, but just for now, it's difficult to keep holding (euro) long positions," said Hiroshi Maeba, a senior dealer at Nomura Securities in Tokyo.

Spot gold was at $1,028.70 a troy ounce, up $1.00 from the New York close.

Crude extended its losses after a fall of more than $2 in New York which came on an unexpected build in gasoline stocks and a stronger U.S. dollar. Nymex December crude was 10 cents from New York, at $77.36 a barrel on Globex.