UPDATE: Asian Shares Fall, Cyclicals Hit; 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 2.1% with Australia's S&P/ASX 200 off 2.4% and South Korea's Kospi Composite down 2.6%. Hong Kong's Hang Seng Index had fallen 2.6% while the Shanghai Composite was down 1.2% and Taiwan's main index off 2.8% industrial Average futures were 16 points higher in screen trade.

"Global equity markets are selling off as that dirty four letter word - R-I-S-K - reasserts itself after a monstrous rally that has far exceeded macro fundamentals,"

Indonesia shares were hard-hit, falling 4.9% after a 2.9% decline Wednesday. "The selloff could show that some investors, mostly foreigners, are switching their portfolios from high-risk assets in emerging markets to international bonds in the U.S.," said Adrian Russian, a director at Sucorinvest Securities.

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 its lowest level against the U.S. dollar since October 14.

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 2.6%. 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 tumbled 13.2% 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 also dropped 6.9% 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.

Real estate developers were weak in China, weighed by concerns of a potential decline in the number of property sales as Beijing's property transaction tax cut measures will expire at the end of the year. Beijing Huaye Real Estate fell 5.8% and Cinda Real Estate was down 4.5%.

Nine Dragons dropped 11.0% in Hong Kong, resuming trade after news it was raising HK$2.87 billion by placing 264.3 million shares.

There was heavy selling of Korean shares by foreign investors. Hyundai Steel fell 6.1% 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 4.0% on news of a 46% on-year drop in third quarter net profit.

In Taiwan, Fubon Financial extended its recent losses with another 2.3% fall as investors grew impatient with the delay in the cross-Strait financial memorandum of understanding that many had expected to be signed soon.

Blue-chip stocks in New Zealand 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.

New Zealand's NZX-50 was 2.3% lower while Malaysian shares fell 0.8%, Philippine shares 1.3% and Singapore's Straits Times Index 1.2%. Thai shares were 1.8% lower.

In currency markets the euro managed to recover after falling to a low of $1.4683 against the U.S. dollar, with the single currency at $1.4718 from $1.4704 late in New York, and at Y132.90 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 Y90.25 - and was recently at Y90.31, from Y90.82 in New York.

The Australian dollar was trading at a more than two-week low against the greenback at US$0.8970. Still, RBS Strategist Greg Gibbs said the Australian dollar remained firmly in an uptrend. "The basic underlying tenets of the Australian dollar recovery this year are still very much in place."

Japanese government bonds were supported by the drop in Tokyo shares. The lead futures contract was up 0.13 at 137.80 points while the 10-year cash yield was down 0.5 basis point at 1.415%.

The three-month LME copper contract was at $6,436 per ton, up $6 from the London kerb, with lead at $2,245 per ton, up $15. Spot gold was at $1,031.10 a troy ounce, up $3.40 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 down 16 cents from New York, at $77.30 a barrel on Globex.