Asian Shares Extend Losses; Australia Leads Declines

By Chao Deng 

A slump in oil prices continued to weigh on Asia Wednesday, with stocks in Australia leading losses.

The benchmark S&P/ASX 200 was down 0.6%, after U.S. oil prices closed below $50 a barrel overnight for the first time in nearly six years. The six-month-long selloff in the commodity has accelerated on worries that demand from Europe and Asia will be weaker than expected while output from the U.S. remains strong.

Markets like Australia have been particularly hurt as lower oil prices are expected to weigh on margins of producers of iron ore, oil and other commodities. Liquefied Natural Gas Ltd., Sundance Energy Australia Ltd. and Santos Ltd. have led losses since the beginning of January, each shedding more than 10%.

Elsewhere in Asia, the Nikkei Stock Average was down 0.2%, Korea's Kospi was down 0.2% and Singapore's Straits Times Index was down 0.3%.

"Nervousness over oil and the outlook for the European economy on heightened 'Grexit' talk may continue to weigh on global markets until at least the Jan. 25 elections," said Eiji Kinouchi, chief technical strategist at Daiwa Securities, referring to the possibility of Greece's exit from the eurozone following an early election later this month.

Still, the selloff in Asia was easing compared with Tuesday when Tokyo--the hardest hit Asian market--fell 3.0%.

Bradford Frischkorn contributed to this article.

Write to Chao Deng at [e-mail]

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