Commodity trading: Plunge in US hits Asian stocks

Commodity trading reversals in US cause Japan and Korean markets to fall. Asian mining, energy companies drop with negative cast to commodity trading.

Jo Yong-Hak/Reuters/File
A foreign currency dealer from the Korea Exchange Bank walks past a monitor displaying the Korea Composite Stock Price Index ( KOSPI) and the exchange rate between the South Korean won and US dollar in Seoul April 21, 2011. The Kospi dropped 1.8 percent May 6, 2011, after sharp declines in commodity trading in the US.

A plunge in commodities and an unexpectedly negative U.S. job growth report rattled investor sentiment in Asia on Friday, sending major benchmarks sharply lower.

Japan's Nikkei 225 index slid 1.8 percent to 9,822.61; South Korea's Kospi index dropped 1.8 percent to 2,140.59; and Hong Kong's Hang Seng index shed 0.5 percent to 23,138.43.

Benchmark crude for June delivery rose 93 cents to $100.73 a barrel in electronic trading on the New York Mercantile Exchange. The day before, oil plunged nearly 9 percent to settle below $100 per barrel as mounting concerns about the U.S. economy triggered the biggest one-day percentage decline in more than two years. In commodity trading apart from oil, markets also fell broadly Thursday.

Energy companies fell, mimicking the price of oil. China National Offshore Oil Corp., or CNOOC Ltd., lost 1.7 percent. PetroChina Co. Ltd. was 1.3 percent lower.

Mining shares also took a hit. Zijin Mining Group, China's biggest gold miner, slumped 3.1 percent. Australia's BHP Billiton, the world's largest mining company, was 1.6 percent down.

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The drop in oil prices was a boost to airline companies, however. Taiwan's EVA Airways Corp. soared 6.3 percent, China's Eastern Airlines Corp. Ltd. jumped 4.6 percent, and South Korea's Asiana Airlines rose 2.9 percent.

Thursday's pullback in commodities indicated that some speculators were locking in their gains and that other investors were protecting profits because of concerns that Friday's U.S. jobs reports may be worse than originally thought.

On Wall Street, stock indexes fell after the Labor Department said that first-time claims for unemployment benefits rose to 474,000 last week, the highest level in eight months. Forecasters didn't see it coming. Economists had expected claims would drop to 410,000.

The Dow Jones industrial average lost 1.1 percent to 12,584.17. The S&P 500 dropped 0.9 percent to 1,335.10. The Nasdaq composite fell 0.5 percent to 2,814.72.

Applications for unemployment benefits have increased in three of the previous four weeks. The jump in claims, along with other signs the U.S. economic recovery is losing strength, have raised concerns about what the government's monthly jobs report for April will reveal when it is released Friday.

Prior to Wednesday, rising earnings had been driving stocks up in recent weeks. But even strong results reported Thursday by several large companies did not outweigh concerns about the economic recovery.

General Motors Co. was among the companies reporting higher profits Thursday. GM said its earnings more than tripled on stronger sales in the U.S. and China.

In currencies, the dollar slipped slightly against the euro to $1.4558 from $1.4530 late Thursday in New York. The dollar strengthened to 80.48 yen from 80.19 yen.

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