Asian Shares Lower After US Fall; Energy Stocks Fade

SINGAPORE -- Asian shares were trading lower Tuesday after Wall Street's decline, with energy-related stocks hit by a fall in crude oil prices.

Japan's Nikkei 225 was down 1.1% with Australia's S&P/ASX 200 off 1.0% - briefly hitting a 10-day low - and South Korea's Kospi Composite falling 0.7%. New Zealand's NZX-50 was 0.9% lower.

"There's definitely an element of nervousness, but no sign of panic," said RBS head of sales Justin Gallagher. Tuesday, the Dow Jones Industrial Average fell more than 100 points.

Resource-related shares were lower across Asia with Inpex off 1.3% in Tokyo, SK Energy down 1.3% in Seoul and Origin down 2.0% in Sydney. Front-month Nymex crude oil futures were down eight cents at $78.60 a barrel on Globex, having dropped $1.82 or 2.3% in New York trade.

Financial stocks were weak in Tokyo, with MUFG down 1.1%.

Still, "the foreign exchange rate may help the market from falling sharply," said Yumi Nishimura, a market analyst at Daiwa Securities SMBC. The U.S. dollar was trading at a five-week high of Y92.33 against the Japanese yen, up from Y92.20 late in New York and Y91.94 around the time of the Japanese stock market close Tuesday, which was positive for exporters.

Australian shares were broadly lower, with Westfield off 1.2%, BHP Billiton down 1.4% and Fairfax falling 2.3%.

Southern Cross Equities said equities were under pressure because heavy U.S. bond issuance was likely to generate U.S. dollar demand, taking money out of the stock market. But some other analysts said buying from offshore investors in Australian banks may continue, amid optimism over the local bank earnings season, which kicks off with NAB's full-year results Wednesday.

Sentiment in South Korea was still supported by Monday's reassuring third quarter gross domestic product data. Hyundai Motor gained 1.3% with LG Electronics up 2.2%.

Shares in New Zealand were falling after a three-day holiday weekend. "It's a reflection of a couple of weak days offshore," said First NZ Capital's Philip Hunter. Fletcher Building was down 2.1% while Telecom fell 1.6%.

The euro remained on the backfoot in currency trade, with the single currency at $1.4852 against the U.S. dollar, from $1.4865 late in New York, and at Y137.07 against the Japanese yen, from Y137.08.

The euro was showing signs of strain, said analysts at UBS. While "few observers would deny the eurozone is enjoying a moderate economic recovery, the rapid rebound in activity and sentiment looks to be slowing. Valuations in asset markets already look hard to justify according to current growth figures, and if growth itself stutters, overstretched risk positions will need to correct."

There was further weakness in the Australian dollar after its recent strong run, with the currency back around US$0.9160, from a high near US$0.9179.

Lead Japanese government bond futures reversed their early falls, supported by weakness in the Nikkei, with the contract up 0.07 at 138.06 points.

Spot gold nudged up 65 cents from New York, to $1,038.65 a troy ounce.