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HONG KONG - Asian stocks tumbled on Tuesday, after Merrill Lynch, the third-largest US investment bank, said it would take a US$5.7 billion (S$7.76 billion) write down related to bad debt, draining confidence in the unstable financial sector.
Coming a day after one of Australia's top banks said it would write down more than US$1 billion in credit-related losses, the news heightening fears that a year-old financial crises that knocked global stocks into bear market has further to run.
Worries that financial sector troubles will further undermine the global economy kept the dollar below Monday's one-month high versus the yen. Gold prices rose for a fourth day and Japanese government bonds surged, pushing the benchmark 10-year yield down to the lowest in three months.
'Equity markets are capitulating on expectations of a deepening of the global banking crisis. Asian and emerging markets are experiencing capitulation due to risk aversion,' Mr Sean Darby, chief Asia strategist with Nomura in Hong Kong, said in a note to clients.
KUALA LUMPUR
The benchmark Kuala Lumpur Composite Index (KLCI) opened lower on Tuesday down 5.56 points at 1,148.53.
HONG KONG
Hong Kong shares will open 1.9 per cent lower on Tuesday, with financial stocks leading losses after their US counterparts were battered overnight by fresh worries over fallout from the credit crisis. Higher oil prices also weighed, dragging down refiners and airline stocks.
The Hang Seng Index is set to open 421.28 points lower at 22,265.93. The China Enterprises Index of top locally listed Chinese firms will open down 2.3 per cent.
SHANGHAI
Chinese stocks dropped sharply on Tuesday morning, led by financial and property shares, in response to major drops in the US and Hong Kong markets as concern about the US credit crisis resurfaced.
The Shanghai Composite Index ended the morning down 2.46 per cent at 2,831.539 points, just off its intra-day low of 2,830.850. Turnover in Shanghai A shares was moderate at 32.9 billion yuan (S$6.56 billion) against Monday morning's 34.4 billion yuan. Losing Shanghai A shares outnumbered gainers by 800 to 124.
The Shanghai index had risen 1.32 per cent on Monday to near major technical resistance in the 2,950-2,990 area, where the early July peak roughly coincides with the April low.
However, some analysts said the market's medium-term outlook remained positive after meetings of the Communist Party leadership and the central bank at the weekend appeared to shift economic policy slightly towards sustaining growth from fighting inflation.
TOKYO
Japanese share prices fell 2.15 per cent in morning trade on Tuesday following heavy losses on Wall Street, where the closure of two regional banks rekindled worries about the financial crisis.
The Tokyo Stock Exchange's benchmark Nikkei-225 index slid 287.34 points to 13,066.44 by the lunch break. The broader Topix index of all first-section shares dropped 30.42 points or 2.34 per cent to 1,270.37. -- AFP, REUTERS
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