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Business News/ Money / Asian stocks end mostly lower as poor US outlook weighs
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Asian stocks end mostly lower as poor US outlook weighs

Asian stocks end mostly lower as poor US outlook weighs

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Hong Kong: Asian markets closed mostly lower on Thursday as a downbeat assessment by the US Federal Reserve and record low home sales raised fears about the state of the world’s biggest economy.

Traders went into sell-off mode in the afternoon to cash in earlier gains made after Australia’s prime minister was forced out, a move that raised hopes that a planned tax on resource companies’ profits may be softened.

In a statement Wednesday after a two-day policy meeting the Federal Reserve suggested the European debt crisis was taking a toll on recovery in the United States.

After leaving interest rates at record low levels, the Fed said economic conditions were likely to warrant keeping “exceptionally low" rates “for an extended period," repeating the language of previous statements.

“The pace of economic recovery is likely to be moderate for a time," said the panel headed by Fed chairman Ben Bernanke.

But it added that “financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad" -- an apparent reference to the euro zone sovereign crisis.

The debt woes of euro zone countries including Greece and Spain have caused concern globally that the problems could spill over and lead to another downturn.

Sentiment was also strained by news that sales of new one-family homes in the United States had plunged 32.7% month-on-month in May to 300,000 -- the slowest pace since records started in January 1963.

Markets had been up earlier after Australia’s former prime minister Kevin Rudd resigned following a shock leadership challenge amid concerns within his party about plummeting ratings.

He was succeeded by Julia Gillard, whom investors hope will take a softer line on a proposed 40% tax on resource companies’ “super profits" that the industry had been fighting.

Soon after Gillard was sworn in, mining giant BHP Billiton said it would pull a series of anti-tax advertisements, after the new prime minister pleaded for a truce.

BHP rose 0.51%, Rio Tinto added 1.19% and Newcrest mining gained 0.27%.

However, the broader Sydney market edged 6.4 points lower to end at 4,479.7 on profit-taking from earlier gains.

Patersons senior private client adviser Chris Blair said: “As you would expect after Rudd’s departure, resources stocks are outperforming.... Obviously it’s giving people some hope that the resources super profits tax will be altered."

Hong Kong fell 0.59%, or 123.12 points, to 20,733.49, while Shanghai dropped 0.12%, or 3.13 points, to 2,566.75.

Tokyo lost earlier gains to end up just 0.05%, or 4.64 points, at 9,928.34.

The euro rose to 1.2337 dollars in Tokyo morning trade from 1.2320 in New York late Wednesday, and to 110.81 yen from 110.62.

The greenback was quoted at 89.81 yen, slightly down from 89.88.

China’s central bank left its yuan exchange rate basically unchanged Thursday following its recent vow to let the currency trade more freely amid mounting US pressure.

The People’s Bank of China set the central parity rate -- the center point of the currency’s allowed trading band -- at 6.8100 to the dollar, only slightly stronger than Tuesday’s 6.8102.

Oil was lower. New York’s main contract, light sweet crude for August delivery, eased three cents to $76.32 a barrel in afternoon trade after hitting an intra-day low of $75.93.

Brent North Sea crude for August delivery was off four cents at $76.23 a barrel.

Gold closed at $1,231.50-$1,232.50 an ounce in Hong Kong, down from Wednesday’s close of $1,241.00-$1,242.00.

In other markets:

— Singapore finished 0.82%, or 23.44 points, lower at 2,847.61.

Singapore Airlines dropped 0.69% to 14.44 Singapore dollars, Noble Group fell 2.69% to 1.81 dollars and Keppel Corp sank 0.91% to 8.67 dollars.

— Seoul closed 0.81%, or 14.05 points, higher at 1,739.87.

— Taipei rose 0.10%, or 7.74 points, to 7,589.89.

Chinatrust Financials rose 1.99% to 17.95 Taiwan dollars while Taiwan Semiconductor Manufacturing Company was 0.17% lower at 62.0.

— Jakarta fell 0.37%, or 10.69 points, to 2,914.10.

— Kuala Lumpur closed down 0.29%, or 3.83 points, at 1,325.87.

Power and gaming group Tanjong lost 2.0% to 17.74 ringgit, HL Bank shed 2.60% to 8.55 while property developer SP Setia rose 2.50% to 4.10.

— Manila closed 0.27%, or nine points, lower at 3,333.97.

Digital Telecommunications fell 6.98% to 1.60 pesos, while Energy Development was off 3.19% at 4.55 pesos.

— Wellington closed 0.16%, or 4.82 points, lower at 3,049.47.

Fletcher Building lost 1.9% to 7.97 New Zealand dollars although Telecom was up 1% at 1.97.

— Bangkok fell 1.65%, or 13.33 points, to 793.19.

Banpu lost 10.00 baht to 624.00 and PTT Plc dropped 4.00 baht to 250.00.

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Published: 24 Jun 2010, 03:57 PM IST
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