Asian stock markets fell for a third day Thursday after signs of weakness in the US housing market added to fears about the health of the global economic recovery. European shares were mixed.
Hong Kong, Shanghai, Sydney and Taiwan all declined 2 per cent or more after a US government report showed new home sales fell unexpectedly in September for the first time since March. That fueled fears the housing rebound was driven solely by government policies that are being withdrawn before the private sector recovers.
"This really increased nervousness about the health of the global recovery and market valuations," said Dariusz Kowalczyk, chief investment strategist for SJS Markets in Hong Kong. Markets got little reassurance from an International Monetary Fund report that raised Asian growth forecasts for this year and next.
Tokyo's Nikkei 225 index dropped 183.95 points, or 1.8 per cent, to 9,891.10 while China's benchmark Shanghai Composite Index shed 2.3 per cent to 2,960.47.
Taiwan's Taiex and Sydney's S&P/ASX 200 suffered the region's biggest declines, both falling 2.4 per cent. Hong Kong's Hang Seng was down 496.59, or 2.3 per cent, to 21,264.99.
As trading got underway in Europe, France's CAC-40 was up 0.1 per cent but Britain's FTSE 100 and Germany's DAX were both off 0.1 per cent.
Adding to investor nervousness was Norway's decision Wednesday to become the first European country to raise interest rates since the crisis began, Kowalczyk said. He said that prompted worries governments might be withdrawing stimulus measures before private sector activity has fully recovered.
"Concerns are that if this support wanes or is withdrawn and the private sector is unable to replace government monetary actions, there could be another economic slump," Kowalczyk said. Elsewhere in Asia, South Korea's Kospi fell 1.5 per cent and Singapore's Straits Times Index dropped 0.7 per cent. Wall Street was hit Wednesday by a government report that showed September sales of new homes falling by a 3.6 per cent seasonally adjusted annual rate of 402,000. Economists had expected 440,000. The Dow fell 119.48, or 1.2 per cent, to 9,762.69. The index is down in five of the past seven days.
The Standard & Poor's 500 index slid 20.78, or 2 per cent, to 1,042.63. The Nasdaq dropped 56.48, or 2.7 per cent, to 2,059.61. Stock futures pointed to modest gains Thursday on Wall Street. Dow futures were up 39, or 0.4 per cent, at 9,750.
Also Wednesday, Goldman Sachs Group Inc. cut its forecast of US economic output in the July-September quarter from an annual rate of 3 per cent to 2.7 per cent. The government is due to report quarterly growth Thursday, and economists are looking for growth at an annual rate of 3.3 per cent after a record four straight quarters of contraction.
Oil prices hung below $78 a barrel in Asia as an unexpected jump in US gasoline supplies cast doubt on the strength of a recovery in crude demand.
Benchmark crude for December delivery was up 10 cents to $77.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.09 to settle at $77.46 on Wednesday. In currencies, the dollar rose to 90.68 yen from 90.64 yen. The euro rose to $1.4743 from $1.4714.