Asia stocks drop as oil prices weigh; Nikkei sheds 0.5%

Investing.com – Asian stock markets were broadly lower on Monday, as oil prices spiked above USD113 a barrel, prompting concerns over the inflationary impact of the global economic recovery.

During late Asian trade, Hong Kong's Hang Seng Index dropped 0.55%, South Korea's Kospi Composite fell 0.26%, while Japan’s Nikkei 225 Index shed 0.50%.

U.S. crude oil prices traded at USD113.40 a barrel, while Brent oil surged above USD126, fuelling concerns that the economic recoveries in the U.S. and Europe could get derailed and potentially hurt Asian growth.

In Hong Kong, shares in airliner Cathay Pacific Airways dropped 1.8% on concern higher fuel costs would weigh on profits. Hong Kong-listed shares of Air China slipped 1.2%, while China Eastern Airlines dropped 1.65%.

However, shares in oil producers performed strongly, with oil and gas giant PetroChina rallying 2.9%, Sinopec saw shares add 1.35%, while China Shenhua Energy saw shares climb 1.6%.

Elsewhere, Japanese automakers led the Nikkei lower after Citigroup downgraded the sector to “sell” from “buy,” saying investors have yet to price in the impact on earnings of last month’s earthquake.

The world’s largest automaker Toyota saw shares drop 2.4%, rival Honda sank 2.2%, while shares in Nissan fell 2.35%.
 
Meanwhile, Australia’s ASX/200 Index added 0.52%, as shares in BHP Billiton jumped 3.8% after the U.K.’s Sunday Times reported that it was in talks to buy Australia’s second largest oil producer Woodside Petroleum for AUD46 billion. Shares in Woodside advanced 1.9% on the news.

The outlook for European equity markets, meanwhile, was upbeat. The EURO STOXX 50 futures pointed to a gain of 0.2%, France’s CAC 40 futures added 0.23%, the FTSE 100 futures edged 0.22% higher, while Germany's DAX futures indicated a rise of 0.29%.

Later in the day, President of the Federal Reserve Bank of Chicago Charles Evans was to speak at a public engagement.