U.S. consumption spooks Asian exporters

Christopher Kaufman, Reuters, Singapore

Asian stocks stumbled on Wednesday due to weak U.S. consumer confidence data, earnings jitters and the dollar's retreat to below 120 yen.

The benchmark Nikkei average finished down 125.78 points or 1.26 percent at 9,877.94, while the capital-weighted TOPIX index was down 1.02 percent at 965.00 points.

The dollar struggled to regain 120 yen with heavy sell orders rumored to be lined up from exporters, but traders said activity was thin and the market lacked fresh factors.

At 06.22 GMT (1.22 p.m. Jakarta time) the dollar was quoted at 119.47 yen against 120.10 yen in late New York on Tuesday. Against the euro it was little changed at 98.23 cents

U.S. stocks ended mixed On Tuesday after key data showed that consumer confidence fell in July, raising concerns that consumer spending might cool, threatening the economy.

The Dow Jones Industrial Average dropped by 0.37 percent to 8,680.03, while the tech-heavy Nasdaq gained 0.67 percent and the S&P 500 rose 0.42 percent.

September futures for each contract were pointing to a lower start on Wednesday for U.S. markets.

European stocks were expected to open mixed on another busy earnings day. U.S. indices climbed slightly after most of Europe's bourses closed on Tuesday, suggesting European stocks could push higher in early trade.

Traders in Europe were focused on Computing giant IBM's purchase of PricewaterhouseCoopers Consulting for US$3.5 billion. IBM slipped with other technology stocks after the bell in the U.S.

Later on Wednesday, the U.S. is expected to report a 2.2 percent annualized growth in its gross domestic product for the second quarter. While the forecast is much lower than the 6.1 percent reported in the first quarter, it would still be the best rate since second quarter 2000.

Oil prices follow through on its buying in New York on fears of U.S. military action against producer Iraq as the market appeared to have shrugged off a mildly bearish weekly API stocks report that showed a crude buildup but a drawdown in gasoline.

By 06.47 GMT, front-month September crude on the after-hours NYMEX trading system was at $27.48 per barrel, up 12 cents from New York where it settled 81 cents higher.

Taiwan stocks closed more than one percent lower after more disappointing second quarter earnings both at home and abroad.

The main TAIEX, which fell as much as 1.55 percent, ended down 1.29 percent at 4,940.38, reversing direction after Tuesday's three percent rise from a more than seven-month low.

Profit taking sapped South Korean shares, hit by the disappointing earnings from Taiwan. The Korea Composite Stock Price Index slid 0.84 percent at 717.99 points.

Hong Kong's key share index was little changed heading into the afternoon despite the weak U.S. consumer confidence data, supported by futures-related buying of blue chip heavyweights such as global bank HSBC Holdings, analysts said.

At 06.48 GMT, the benchmark Hang Seng Index was up 0.1 percent at 10,165.09 points.

Singapore shares steadied after a shaky start to be little changed by midday, helped by a report showing the local unemployment rate had declined after increasing for a year.