Asian stocks slump over Korea firing

Asian stocks slumped today, unnerved by the eurozone debt crisis, firing on the Korean peninsula and expectations that China will take further steps to rein in inflation.

Hong Kong's Hang Seng Index ended the session down 2.67 per cent, or 627.88 points, at 22,896.14, as markets began to react to Tuesday's artillery fire near the border between North and South Korea.

Shanghai's Composite Index closed down 1.94 pe rcent, or 56.09 points, at 2,828.28, while Sydney's S&P/ASX 200 index fell 1.17 percent, or 54.4 points, to 4,589.1.

South Korea's Kospi index fell just 0.79 per cent, or 15.40 points, to 1,928.94, with the Korean tensions likely to have more impact on Wednesday as the news broke close to the market close.

Tokyo was closed for a holiday.

Rob Ryan, a currency strategist at BNP Paribas Asia, told Dow Jones Newswires: "Any time shells fly through the air it's not going to be positive (for) risk."

However in Hong Kong, Francis Lun of Fulbright Securities, was philosophical, saying: "Isn't that the North Koreans' usual tactic when they want something?"

Markets were in any case weighed down by worries that the eurozone's debt crisis may be far from over despite a bailout package stitched together for Ireland.

"The market is just fatigued," said RBS head of sales Justin Gallagher in Sydney.

"Europe has been something of a time bomb for a while now and there's still this undercurrent of structural issues that haven't been dealt with," he said, referring to fears that unresolved debt problems could pose a generalised threat to the eurozone.

Traders also voiced worries about China and the likelihood of further measures to cool the economy, after Chinese authorities raised banks' reserve requirement ratios last week.

"The latest reserve requirement ratio hike isn't enough to curb inflation," said Zhuang Qianhua at Huatai Securities.

The euro sank to 1.3564 US dollars at 0630 GMT from 1.3622 dollars in afternoon Asian trade. It fetched 113.31 yen compared with 114.82 yen yesterday.

The greenback bought 83.54 yen compared with 83.29 yen earlier and rose further later on the Korean news.

Wall Street presented a mixed picture yesterday, with worries about Europe compounded by a vast insider-trading probe in the United States.

The blue-chip Dow Jones Industrial Average closed down 0.22 per cent, while the broader S&P 500 index fell 0.16 per cent. However, the tech-rich Nasdaq was up 0.55 percent, boosted by an 8.9 per cent rise in shares of subscription movie service Netflix.

In other developments, New Zealand Oil and Gas, which holds almost a one-third stake in the Pike River coal mine where 29 men are missing after an explosion, saw its shares plummet 27.50 per cent when a trading suspension was lifted.

In Sydney, Qantas stocks rose slightly after the carrier announced it would begin flying its Airbus A380 superjumbos again from the weekend, after they were grounded for 19 days due to engine safety fears. Shares in Qantas closed up one cent at 2.64 Australian dollars.

Oil prices fell over the worries about Europe, analysts said.

New York's main contract, light sweet crude for December delivery, fell 66 cents to 81.08 dollars in the afternoon. Brent North Sea crude for January shed 77 cents to 83.19 dollars.

Gold closed at 1,363.00-1,364.00 US dollars an ounce in Hong Kong, slightly up from yesterday's close of 1,361.00-1,362.00 dollars.