Asian stocks weighed by Korea firing, eurozone, China

Hong Kong's Hang Seng Index ended 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 per cent, or 56.09 points, at 2,828.28, while Sydney's S&P/ASX 200 index fell 1.17 per cent, 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 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 at 0630 GMT from $1.3622 in afternoon Asian trade. It fetched 113.31 yen compared with 114.82 yen on Monday.

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 on Monday, 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 per cent, 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 in the afternoon. Brent North Sea crude for January shed 77 cents to $83.19.

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

In other markets:

-- Manila fell 0.94 per cent, or 39.54 points, to 4,147.35.

Top-traded SM Investments dropped 2.68 per cent to 510 pesos while Aboitiz Power fell 1.64 per cent to 32.95 pesos.

-- Wellington fell 1.16 per cent, or 37.86 points, to 3,258.77 points.

-- Taipei fell 0.55 per cent, or 46.28 points, to 8,328.63.

Semiconductor manufacturer UMC fell 1.66 per cent to 14.8 Taiwan dollars, while Taiwan Semiconductor Manufacturing Company was down 0.63 per cent at 63.4.

-- Jakarta fell 1.68 per cent, or 63.04 points, to 3,678.19.

-- Singapore fell 2.02 per cent, or 64.62 points, to 3,126.30.

Sembcorp Industries fell 2.46 per cent to 4.75 and Singapore Airlines shed 2.63 per cent to 15.54.

-- Kuala Lumpur fell 1.04 per cent, or 15.67 points, at 1,487.53.

-- Bangkok fell 0.95 per cent, or 9.72 points, to 1,009.47.

Energy company PTT lost 1.23 per cent, or 4.00 baht, to 322.00, while Siam Cement ended down 1.83 pe rcent, or 6.00 baht, at 322.00.

-- Mumbai fell 1.33 percent, or 265.75 points, to 19,691.84.

India's largest bank State Bank of India fell 2.83 percent, or 86 rupees, to 2,952.6, while the country's biggest mobile phone firm Bharti Airtel fell 2.33 percent, or 16.65 rupees, to 329.15.

Automaker Mahindra and Mahindra fell 0.87 percent, or 6.65 rupees, to 759.7, after announcing the signing of a 463-million-dollar deal to take a controlling stake in South Korean utility vehicle maker Ssangyong Motor.