Asian markets down amid rate hike expectations

June 14, 2011 - 11:44 PM
Wall Street

Traders work on the floor of the New York Stock Exchange Tuesday, June 14, 2011. (AP Photo/Richard Drew)

BANGKOK (AP) — Asian stock markets mostly fell Wednesday as investors anticipated rate hikes by central banks in India and China to contain stubbornly high inflation.

Oil prices hovered above $99 a barrel after a report showed U.S. crude inventories fell more than expected, suggesting demand may be improving. The dollar was lower against the yen but up against the euro.

Japan's Nikkei 225 stock average rose 0.1 percent to 9,561.30. Honda Motor Corp. gained 1.3 percent a day after the company announced that vehicle production in Japan is expected to be back at nearly normal levels by later this month and, outside of Japan, by August or September.

Japanese manufacturing was disrupted by a huge earthquake and tsunami on March 11 but analysts say the recovery at Honda and other Japanese automakers has been remarkable

Other markets fell amid expectations that China's central bank will go ahead with at least one more interest rate hike this month or next.

China's May's inflation rate of 5.5 percent was the highest since July 2008. Beijing has made taming price increases a priority but its measures could also slow growth in the world's second-largest economy.

Inflation is also buffeting India's economy, the third largest in Asia. The Reserve Bank of India, which has raised key policy rates nine times since March 2010 in an effort to tame inflation, is expected to raise rates again at a monetary policy review Thursday.

Hong Kong's Hang Seng index fell 0.2 percent to 22,445.70 and South Korea's Kospi dropped 0.4 percent to 2,069.10. Australia's S&P/ASX 200 lost 0.3 percent to 4,569.80.

In New York, a government report Tuesday on retail sales in May was better than expected, driving stocks higher. The government said retail sales edged down 0.2 percent last month, but economists had expected worse.

Excluding weak car sales, retail sales rose 0.3 percent. Americans bought fewer cars during the month, but that was more a reflection of production disruptions caused by the earthquake and tsunami disaster in Japan.

The Dow Jones industrial average rose 1 percent to close at 12,076.11. The Standard & Poor's 500 index rose 1.3 percent to 1,287.87. The Nasdaq composite index rose 1.5 percent to 2,678.72.

Benchmark oil for July delivery was down 11 cents to $99.26 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2.07 to settle at $99.37 on Tuesday.

In currencies, the euro dropped to $1.4419 from $1.4468 late Tuesday in New York. The dollar slipped to 80.42 yen from 80.52 yen.