Asia stocks drop as EU woes outweigh Chinese data

Investing.com – Asian stock markets retreated on Thursday, as lingering concerns over the euro zone’s financial crisis overshadowed data showing that Chinese consumer prices rose at the slowest pace in 15 months in December.   

During late Asian trade, Hong Kong's Hang Seng Index dipped 0.2% Australia’s S&P/ASX200 fell 0.15%, while Japan’s Nikkei 225 Index slumped 0.75%.

Concerns over the euro zone’s debt crisis continued to dominate market sentiment after ratings agency Fitch said Wednesday that the European Central Bank should do more to avoid a 'cataclysmic' collapse of the single currency.

The news outweighed hopes for near-term monetary easing in China after official data showed that consumer price inflation rose by a seasonally adjusted 4.1% in December, easing from 4.2% in November.

Shares in oil producers led losses in Hong Kong, tracking oil prices lower. Oil giant PetroChina fell 1.5%, offshore gas driller CNOOC dropped 2.3%, while Sinopec shares slumped 1.55%.

Losses were limited as shares in the financial sector outperformed, boosted by the China inflation figures. Hong Kong-listed shares of Bank of China jumped 2.25%, while China Construction Bank shares added 1.05%.

Meanwhile, in Japan, shares in exporters performed poorly after data showed that the nation’s current account surplus fell by a greater-than-expected 85.5% in November, as exports dropped amid slowing global demand.

Consumer electronics giant Sony saw shares decline 2.3%, shares in rival Sharp slumped 3.15%, while automakers Toyota and Nissan retreated 1.2% and 1.5% respectively.

Financials also contributed to losses. Japanese investment bank heavyweights Nomura Holdings and Daiwa Securities, which both have large exposure to European sovereign debt, tumbled 3.5% and 3.2% respectively, while the nation’s third largest lender Mizuho Financial Group dropped 1.8%.

Meanwhile, in Australia, shares in insurer QBE Insurance Group led losses, plunging 12.7% after warning that its 2011 net profit will decrease by between 40% and 50% from 2010, citing record levels of catastrophe claims and unrealized losses from difficult investment markets
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Looking ahead, the outlook for European stock markets was mixed ahead of the ECB’s rate decision. Also Thursday, Spain was to offer up to EUR5 billion of government bonds maturing in 2015 and 2016, while Italy was set to auction as much as EUR4.75 billion of 5-year bonds on Friday, in what was being viewed as a critical test of investor’s appetite for euro zone sovereign debt.

The EURO STOXX 50 futures pointed to a gain of 0.25%, France’s CAC 40 futures added 0.35%, London’s FTSE 100 futures dipped 0.1%, while Germany's DAX futures pointed to a modest 0.1% rise.

Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims.