Asian stocks slid for the first week in three, led by Kyocera Corp and Samsung Electronics Co, amid concern rising global oil prices and possible interest rate increases in China will slow economic growth.
"Higher oil prices certainly won't be welcomed by the market, certainly not at a time when you have fears of a rate hike in China," said Makoto Sakuma, who helps manage the equivalent of US$3.6 billion at Asahi Life Asset Management Co in Tokyo.
The Morgan Stanley Capital International Asia-Pacific Index, which tracks the performance of more than 900 stocks in the region, slid 2.6 percent to 86.74 in the week just ended. It was the first weekly drop since the five days ended May 14.
For the week, Japan's Nikkei 225 Stock Average fell 1.6 percent, while the broader Topix index slid 1.5 percent. Benchmarks in Japan, South Korea, Hong Kong, Thailand and Indonesia had their first weekly declines in three.
The MSCI Asia-Pacific index has lost 6 percent in the past month on concern rising crude oil prices will hamper economic growth in countries such as Japan and South Korea that import most of their oil. There also are concerns China may raise interest rates to curb inflation.
Kyocera, the world's largest maker of ceramic packaging used to protect finished microchips, fell 3.4 percent and Samsung, the world's No. 2 semiconductor maker, slid 7.5 percent. Both stocks had their first weekly drop in two weeks.
South Korea's biggest airline, Korean Air Co, dropped 7.1 percent for the week. The company has said that for every dollar increase in fuel prices, its annual costs rise about 30 billion won (US$26 million). Singapore Airlines Ltd, the national carrier, dropped 2.9 percent in the same period. Cathay Pacific Airways Ltd, Hong Kong's largest carrier, declined 3.1 percent.
Crude futures traded on the New York Mercantile Exchange rose to a record US$42.45 a barrel on Wednesday, the highest price since trading began in 1983, after the killing of 22 people in a key Saudi Arabian oil-producing region last weekend raised concern that further attacks might disrupt shipments.
Woodside Petroleum Ltd paced weekly gains among regional producers and explorers. Woodside, Australia's second-largest oil and gas company, ended the week 3.8 percent higher. Japan Petroleum Exploration Co, the nation's biggest producer by market value, surged 15 percent, its biggest weekly advance since it started publicly trading in December.
OPEC on Thursday said it would boost its production target by 2 million barrels a day, and may add 500,000 barrels a day in August in an effort to prevent high prices from curbing global economic growth.
Stocks also fell after a report in Hong Kong's South China Morning Post fueled concern that Chinese interest rates will increase soon. Credit Suisse First Boston and Goldman Sachs Group Inc said China may raise interest rates as soon as next month.
One "risk going forward is clearly the Chinese are in the process of trying to slow the economy," said Richard Saler, who helps manage $1.2 billion of international equities at ING Investments in New York. "Even a soft landing might have a material impact."
China has no immediate plans to raise interest rates as it has other policy tools at its disposal to curb inflation, the central bank said on Thursday.
Japanese banks declined after the Nihon Keizai Shimbun said the Financial Services Agency may require UFJ Holdings Inc. to meet stricter oversight requirements as it probes possible breaches of disclosure rules.
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