HONG KONG—Asian markets mostly fell on Tuesday owing to growing concerns about a liquidity crisis in China, although Shanghai managed to claw back some ground after sinking more than five percent at one point.
The dollar also lost its upward momentum against the yen after seeing a pull-back in New York following comments from US Federal Reserve officials indicating the bank would not immediately wind down its stimulus program.
Tokyo fell 0.72 percent, or 93.44 points, to 12,969.34, Seoul lost 1.02 percent, or 18.38 points, to close at 1,780.63 and Sydney slipped 0.28 percent, or 13.1 points, to 4,656.0—its lowest close in six months.
Shanghai was 0.19 percent lower, giving up 3.73 points to end at 1,959.51, with bargain-hunting helping it bounce from a second successive fall of more than five percent earlier in the day.
But Hong Kong added 0.21 percent, or 41.74 points, to end at 19,855.72, reversing earlier losses.
With no other news to influence buying, the focus was on China, where investors have been spooked by a cash crunch in the financial system that has raised fears banks will cut back on loans, which could in turn drag on the economy.
The central People’s Bank of China added to those worries on Monday when it ruled out providing any fresh money to bolster markets and ordered lenders to get their own houses in order.
National Australia Bank said: “The (central bank) remains reluctant to intervene and said that the onus was on lenders to better manage their balance sheets and that liquidity was at a ‘reasonable level.’
“The risks to the Chinese growth outlook are rising, but it looks like the new leadership in China may be willing to accept some short-term pain in an attempt to address the financial risks in the banking system.”
Wall Street provided a negative lead, with the three main indices ending well down. The Dow fell 0.94 percent, the S&P 500 tumbled 1.21 percent and the Nasdaq shed 1.09 percent.
On forex markets the dollar gave back its early gains, falling further after dipping in New York on comments from Fed officials that sought to ease concerns over its monetary easing policy.
Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, released a statement and held a conference call with reporters to argue that it would continue the bond-buying until the jobless rate fell further.
And Dallas Federal Reserve chairman Richard Fisher said the central bank was not exiting its stimulus, only scaling it back.
The greenback was at 97.30 yen, against 97.74 yen in New York late Monday. The euro bought $1.3125 and 127.80 yen against $1.3124 and 128.28 yen.
Oil prices fell, with New York’s main contract, West Texas Intermediate light sweet crude for delivery in August, up 52 cents at $95.70 a barrel in afternoon trade while Brent North Sea crude for August added 34 cents to $101.50.
Gold fetched $1,283.31 per ounce by 1045 GMT, from $1,283.99 late Monday.
In other markets:
— Mumbai rose 0.48 percent, or 88.26 points, to 18,629.15.
India’s biggest telecom services firm Bharti Airtel rose 4.34 percent to 295.40 rupees. State-run oil explorer ONGC rose 3.80 percent to 310.20 rupees.
— Bangkok gained 1.51 percent, or 20.54 points, to 1,384.63.
Bangkok Dusit Medical Services jumped 6.92 percent to 139 baht, while power firm Electricity Generating dropped 7.43 percent to 124.50 baht.
— Kuala Lumpur shares fell 0.55 percent, or 9.55 points, to close at 1,728.64.
Hong Leong Bank lost 2.2 percent to 13.44 ringgit while YTL Corp. ended 1.8 percent lower at 1.61. British American Tobacco rose 2.2 percent to 58.30 ringgit.
— Jakarta ended down 0.24 percent, or 10.59 points, at 4,418.87.
Telecoms firm Telekomunikasi Indonesia fell 2.50 percent to 9,750 rupiah, while palm oil firm Sinar Mas Agro Resources and Technology added 19.40 percent to 8,000 rupiah.
— Singapore was up 0.51 percent, or 15.62 points, to 3,089.93.
Agribusiness company Wilmar International was down 0.95 percent to Sg$3.12 while Oversea-Chinese Banking Corporation gained 1.74 percent at Sg$9.92
— Taipei fell 1.22 percent, or 94.80 points, to 7,663.23.
Smartphone maker HTC rose 2.31 percent to Tw$243.5 while Hon Hai was 0.14 percent lower at Tw$70.2.
— Wellington closed down 1.08 percent, or 47.05 points, at 4,316.99.
Telecom was off 1.56 percent at NZ$2.21, Air New Zealand slipped 2.07 percent to NZ$1.42 and Fletcher Building was up 0.49 percent at NZ$8.20.
— Manila fell 3.05 percent, or 181.99 points, to end at 5,789.06.—Danny McCord