Asian stocks followed US shares lower yesterday after a videotape showing al-Qaeda leader Osama bin Laden rattled investors on the second anniversary of the Sept. 11 attacks.
But the dollar was steady to firmer and traders said the currency market was unfazed by the tape aired by al-Jazeera television. Gold was little changed after benefitting recently from its status as a safe investment in troubled times.
Japanese shares were the biggest losers in Asia, nursing their heaviest falls in more than a month as semiconductor stocks mirrored a tumble in their US peers.
"New York fell, foreigners are selling and Tokyo was overheated and due to correct anyway. There is little reason to buy today," said Haruki Takahashi, head of equity dealing at UFJ Tsubasa Securities.
The Nikkei average closed down 2.9 percent at 10,546.33, with chip equipment makers Tokyo Electron and Advantest falling around 6 percent. Other decliners included electronics giants Matsushita Electric, NEC and Sony, as well as banks Mizuho and UFJ.
An MSCI index of shares elsewhere in the Asia Pacific were flat after hitting a three-year high on Tuesday.
Australia and Singapore were about a third of a percent weaker.
Hong Kong shares rebounded marginally, snapping a three-day losing streak as bargain hunters bought into oversold bluechips.
The Hang Seng Index edged up 0.68 percent to 10,883.52. On Wednesday, the index had stumbled 236.51 points, or 2.14 percent.
South Korea and Taiwan were closed for holidays, meaning some of the region's biggest chipmakers were untraded.
The falls followed losses on Wall Street, where the technology-biased NASDAQ Composite Index dropped 2.65 percent for its biggest loss in nearly two months.
US semiconductor stocks posted their largest daily decline since January as a revenue forecast from chipmaker Texas Instruments Inc failed to impress investors who had already been anticipating a rebound in the sector.
The Dow Jones Industrial Average closed down 0.91 percent after al-Jazeera showed what was said to be a new tape of al-Qaeda leaders walking in the mountains.
Currency traders were paying more attention to the risk of further Japanese intervention to weaken the yen than to the bin Laden tape, leaving the dollar little changed.
Hiroyuki Watanabe, a foreign exchange manager at Shinsei Bank, said the dollar may benefit if the anniversary of the attacks on the US passes peacefully.
"If nothing happens on September 11, those who had put on long yen positions to hedge against any dollar-bearish incidents could liquidate them," he said.
The dollar hovered at around ?117.20, up a touch after rising late Wednesday on talk that the Bank of Japan may have intervened during New York hours. The dollar stood at around US$1.1192 to the euro.
RSS