Selling persists in Asian stocks

Markets extend losses as German short sales ban fail to sooth sentiments

Asian stocks continued to record losses today, reeling under pressure from the Euro zone debt worries and ideas that the recent decision by Germany to ban naked short selling Euro zone sovereign bonds, credit default swaps and shares in 10 of Germany's top companies, mean there are serious threats to the financial stability of the Euro zone. Dollar fell above 1.2400 for a while but then recouped these losses and currently trades at 1.2380 against the Euro. This pressurized risky assets after crude and copper went up earlier in the day.

Japan's Nikkei fell, briefly falling below the 10,000-point level during the session. The stocks fell right from the start amid increasing concerns about the problems in Europe and its likely impact on the global economic growth. The weakening of the Euro against the major currencies, including the Japanese yen, and the strength of yen against the US dollar also impacted market sentiment as investors preferred to shun risk aversion and opted for safety. The benchmark Nikkei 225 Index closed down 1.5%, or 156.53 points, at 10,030, while the broader Topix index of all First Section issues fell 12.49 points, or 1.4%, to 898.

On the economic front, a preliminary report released by the Cabinet Office in Japan revealed that the country's gross domestic product added 1.2% in the first quarter of 2010 compared to the previous three months. On an annualized basis, GDP was up 4.9% for the fourth straight quarter of gain - but again missing forecasts for a 5.5% increase after the revised 4.2% gain in the previous three months.

Australia's S&P/ASX 200 finished at its lowest level since August, while the Australian dollar also tumbled amid lingering worries over the euro zone, the local government's proposed mining tax and a recent fall in commodity prices. The sharp drop in the Australian currency, which shed more than 10 cents since the beginning of the month, has raised fresh concerns that the weakness in the euro. The benchmark S&P/ASX200 Index declined 70.60 points, or 1.61% and closed at 4,316, while the All-Ordinaries Index ended at 4,342, representing a loss of 71.90 points, or 1.63%.

On the economic front, a report released by the Australian Bureau of Statistics revealed that the average weekly wages in the country rose 5.8% on a yearly basis in February 2010, coming in at A$1,242.20. In the three months to February, the average weekly ordinary time earnings increased a seasonally adjusted 1.1%, compared to the 2.2% increase recorded in the previous three months period up to November, the report added. The average weekly earnings of all employees stood at A$968.10 in February, up 5.7% from a year ago.

China's stocks also dropped, sending the benchmark index to a three-week low, on concern Europe's debt crisis and Chinese property curbs will hurt earnings growth. The Shanghai Composite Index declined 31.87, or 1.2 percent, to 2,555.94 at the close, the lowest since April 30. The measure has lost 22 percent in 2010, Asia's worst performer, after surging 80 percent last year. It entered a bear market on May 11 after falling 21 percent from its Nov. 23 high. The CSI 300 Index dropped 1.3 percent to 2,726.02

In other markets, Hong Kong's Hang Seng Index fell 0.2% while Straits Times – in Singapore shed 0.76% and the TSEC in Taiwan shed1.78%

In the U.S., stocks saw considerable weakness on Wednesday, as lingering worries regarding the future of the European Union and its currency continued to eclipse improvement on the U.S. economic front. The Dow fell by 66.58 points or 0.6% to 10,444, the Nasdaq declined by 18.89 points or 0.8% to 2,298 and the S&P 500 slid by 5.75 points or 0.5% to 1,115.

US dollar appreciated well under 1.2400 and currently trades at 1.2339. Light sweet crude oil futures for June delivery came off a high of $73 and currently trades at $70.99, down around $1.50 per barrel.