2:17 AM
HONG KONG |
HONG KONG (Reuters) - Asian shares dropped after a massive earthquake hit Japan, including the capital Tokyo, darkening an already bleak mood caused by weak economic data and unrest in Saudi Arabia.
The quake struck just before the close of Tokyo stock trading. Japan's Nikkei average .N225 closed at an intraday and five-week low, down 1.7 percent on the day.
The Hong Kong's Hang Seng share index .HSI was down 1.8 percent, and Nikkei futures in Singapore tumbled more than 3 percent. At 6:50 a.m. GMT, Nikkei June futures were down 2.8 percent at 10,075.
The magnitude 8.9 quake shook buildings in Tokyo, causing "many injuries" and triggered a four-meter (13-ft) tsunami, NHK television and witnesses reported.
The yen extended losses against the dollar after the quake, falling to 83.29 yen to the dollar compared with 82.80 before it struck.
Brent crude held near $115 per barrel as investors monitored developments in the Middle East. Forces loyal to Libyan leader Muammar Gaddafi battled rebels at an oil port, while Saudi police fired in the air to disperse protesting Shi'ites.
Oil prices are up by a quarter this year, with most of the gains coming since the Libyan crisis erupted.
While oil prices around this level posed no substantial threats to the world economy or financial markets, the risk that prices may rise to damaging levels has risen substantially, Barclays Capital strategists said.
Chinese inflation in February remained close to 5 percent, suggesting tighter monetary policy may be needed, adding to the uncertainty.
Key stock indexes in Australia .AXJO and South Korea .KS11 closed down more than 1 percent each. The broader Asian market outside Japan was down 1.4 percent, extending its drop by more than 3 percent for the week as fresh outbreaks of violence in the Middle East kept markets on edge.
Weak U.S. economic data spurred some profit taking in shares in developed markets which have enjoyed a handsome run this year, though some bargain buying checked losses.
RISK REDUCTION
Overnight, a weak Wall Street which ended down nearly 2 percent. The S&P 500 .SPX is up by a third since last July. .N
"It is another day of reducing risk across the portfolio. We have had it one way for too long and with big issues hitting, everyone is running to the exit at the same time," Chris Weston, an institutional dealer at IG Markets said.
In credit markets, sovereign credit default swap spreads pushed wider, reflecting the general risk aversion sentiment.
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