Asia stocks slump ahead of EU summit; Nikkei falls 0.7%

Investing.com – Asian stock markets were broadly lower on Thursday, as investors remained jittery amid growing uncertainty over the outcome of a critical European Union summit due to start in Brussels later in the day.
 
During late Asian trade, Hong Kong's Hang Seng Index dropped 0.8%, Australia’s S&P/ASX200 edged 0.3% lower, while Japan’s Nikkei 225 Index retreated 0.7%.

European leaders are to discuss proposed changes to EU treaties which would allow for greater fiscal integration and stricter enforcement of budgetary discipline in the single currency bloc.

Focus on the summit has intensified since ratings agency Standard & Poor's placed 15 euro zone nations, including AAA-rated Germany and France, on review for credit downgrades due to the region’s deepening financial crisis.

Also Thursday, the European Central Bank was expected to cut interest rates by 0.25% at its policy meeting, a move which would take it back to a record-low 1%.

Shares in exporters with high exposure to Europe led losses in Japan. Automakers Honda and Nissan saw shares drop 1.8% and 2.1% respectively, while chipmaker Elpida Memory declined 2.2%.

Meanwhile, shares in nuclear power plant operator Tokyo Electric Power Company plunged 11.3% amid reports that it may be taken over by the Japanese government.

Heavy machinery makers also contributed to losses after data showed that Japanese core machinery orders dropped 6.9% last month. Fuji Heavy Industries shares fell 1.1%, while mining equipment maker Komatsu slumped 0.9%.

Elsewhere, in Hong Kong, shares in raw material producers led losses after crude oil and metal prices declined on the New York Mercantile Exchange, dampening earnings prospects for miners and energy explorers.

Copper producer Jiangxi Copper Company saw shares weaken 1.85%, oil giant PetroChina sank 2%, while gold producer Zijin Mining saw shares drop 2%.

Shares in retailer Li & Fung slumped 4.1% after Singaporean sovereign wealth fund Temasek Holdings said it would sell bonds exchangeable for Li & Fung shares it holds.

The outlook for European stock markets was upbeat. The EURO STOXX 50 futures pointed to a gain of 0.9%, France’s CAC 40 futures rose 1.2%, the FTSE 100 futures added 0.6%, while Germany's DAX futures jumped 1%.

Later in the day, the U.S. was to release official data on initial jobless claims.