Asian Stocks Decline Led by Japan and Hong Kong (MarketWatch) (15-01-2008)

HONG KONG (MarketWatch) -- Most Asian markets declined on Tuesday, with the Nikkei dropping below the 14,000 level for the first time since 2005, as the yen's strength hurt exporters. Hong Kong stocks were dragged down by early afternoon selling in heavyweights such as HSBC Holdings and China Mobile.

Conversely Taipei-listed shares gained, on China Airlines and Huaku Construction, after the opposition party Kuomintang's decisive electoral victory over the weekend.

Japan's Nikkei 225 average ended just shy of 1% lower at 13,972.63, extending losses into the third straight session, as trading resumed after an extended holiday weekend. The broader Topix index sank 2% to 1,350.20.

The Nikkei, the only benchmark index in Asia that offered negative returns in 2007, is currently 64% lower than the all-time high it hit in December 1989.

Among shares tumbling to lows last seen in February of last year, were exporters, Canon Inc. with a drop of 2.1% and Honda Motor Co., which lost 4.4%, while in the financial sector, Kanto Tsukuba plunged by 5.92, Mizuho Financial Group stock dropped 1.4%, Mitsubishi UFJ fell by 1.28% and Sompo Japan Insurance sank 4.9%; shares of diversified Sumitomo Heavy Industries eased 2.1%, while real estate major Mitsui Fudosan Co. slipped 0.7%.

In currency trading, the U.S. dollar tumbled 0.8% to 107.34 yen and the euro skidded 0.9% to 159.36 yen as risk-averse investors reversed their carry trades. A carry trade is a practice where investors sell low-yielding currencies such as the yen to invest in high-yield assets.

In Hong Kong, the Hang Seng Index suffered another session of high volatility. The index rose as high as 26,800.52, before ending 2.4% lower at 25,837.78, while the Hang Seng China Enterprises index sank 3.1% to 14,999.90.

Australia's S&P/ASX 200 gave up 0.3% at 5,960, New Zealand's NZX 50 index shed 0.4% to 3,810.50 and South Korea's Kospi declined 1.1% to 1,746.95.

China's Shanghai Composite fell 1% to 5,443.79, snapping a three-day winning streak, while India's Sensitive Index, or Sensex, lost 1.2% at 20,478.44 in afternoon trading.

Taiwan listed stocks ended with strong gains for the second straight day, untouched by the weak sentiment that engulfed the rest of the region. The Weighted index added 3.1% at 8,428.84 during the day, on top of the 1.8% advance it managed in the previous session.

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