ASIA MARKETS: Japan Leads Asia Stock Losses On Syria Fears

By V. Phani Kumar, MarketWatch

HONG KONG (MarketWatch) -- Japanese stocks slumped to lead Asian markets lower Wednesday, tracking a global selloff on heightened fears of U.S.-led military intervention in Syria.

The Nikkei Stock Average tumbled 2% in Tokyo, and Hong Kong's Hang Seng Index fell 1.1%, though the Shanghai Composite lost a more modest 0.3%.

Australia's S&P/ASX 200 dropped 1%, and South Korea's Kospi fell 0.5%.

The declines followed a 170-point, 1.1% drop Tuesday for the Dow Jones Industrial Average (DJI), with equities in the Middle East and Europe also slammed on worries over escalation in Syria, after government forces reportedly used chemical weapons against civilians amid the ongoing civil war.

U.S. President Barack Obama is currently consulting with allies and members of the U.S. Congress on the response.

Several analysts said the developments posed a new risk to global markets, but they advised investors against expecting a major impact on the global economy from a possible military confrontation.

"This selloff is a clear knee-jerk reaction by global market participants who are clearly reducing risk over fears the situation in Syria could deteriorate substantially. It's just a typical case of irrational fear driving investors' decision making," said Rivkin Securities analyst Tim Radford.

Wells Fargo Advisors chief international strategist Paul Christopher said any potential change in the balance of power in Syria's civil war poses a new uncertainty for financial and commodity markets, but it doesn't immediately threaten the global economy.

The losses were spread across sectors in multiple markets, with internationally exposed firms in Japan also suffering as the U.S. dollar (USDJPY) strengthened from Tuesday's levels to hover around 97 yen.

Tokyo Steel Manufacturing Co. sank 6.2%, Kubota Corp. skidded 3.1%, Suzuki Motor Corp. (SZKMY) lost 3.9%, and Matsui Securities Co. (MAUSY) fell 3.7% in Tokyo.

Among loss leaders in Hong Kong, state-owned PetroChina Co. and its natural-gas-distribution unit Kunlun Energy Co. -- both constituents of the Hang Seng Index -- fell sharply as trading resumed after a halt Tuesday at the companies' request.

PetroChina (PTR) slumped 4.1%, and Kunlun (CNPXF) plunged 10.8%, after PetroChina said three of its senior executives, including the chairman of Kunlun, were under investigation by authorities for "severe disciplinary violations."

PetroChina's Shanghai-listed shares dropped 1.1%.

Several property developers also declined, with China Resources Land Ltd. (CRBJF) shedding 3.3% in Hong Kong, while Gemdale Corp. dropped 1.7% and Poly Real Estate Group Co. shed 1.6% in Shanghai.

In Seoul, LG Display Co. (LPL) gave up 1.2%, and KB Financial Group Inc. (KB) dropped 1.7%, while heavyweight Samsung Electronics Co. (SSNLF) lost 0.4%, falling less than the broader market.

In Australia, the resource sector saw weakness despite sharp gains for oil and gold futures overnight in the U.S.

Diversified miner BHP Billiton Ltd. (BHP) dropped 1.7%, gold producer Newcrest Mining Ltd. (NCMGF) fell 1.1%, and energy firm Santos Ltd. (SSLTY) shed 0.9%.

Shares of Woolworths Ltd. rose 0.7% after saying it expects subdued retail conditions in fiscal 2014, but projecting earnings growth of 4% to 7% from continuing operations for the year.

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