Asia stocks tumble on S&P warnings; Nikkei drops 1.4%

Investing.com – Asian stock markets were sharply lower on Tuesday, as appetite for riskier assets was weighed after ratings agency Standard & Poor’s warned that it may downgrade the credit ratings of the euro zone’s top-rated countries.

During late Asian trade, Hong Kong's Hang Seng Index tumbled 1.6%, Australia’s S&P/ASX200 sank 1.5%, while Japan’s Nikkei 225 Index dropped 1.4%.

In a statement released late Monday, S&P said that it placed the sovereign ratings of 15 euro zone nations, including top rated Germany and France on watch for a possible downgrade, citing the region’s worsening debt crisis.

The warning came after French and German leaders outlined proposals to enforce stricter budget rules in the euro zone, to be discussed at Friday’s summit.

Shares in the financial sector performed poorly in Japan. Investment banks Nomura Holdings and Daiwa Securities, which have large exposure to European sovereign debt, slumped 1.9% and 1.55% respectively, while the nation’s third largest lender Mizuho Financial Group fell 1.9%.

Japanese exporters were broadly lower, as the yen rose against most of its major counterparts, dampening the outlook for export earnings.

Consumer electronics giant Sony retreated 1.85%, semiconductor manufacturer Elpida Memory saw shares tumble 4.65%, while automakers Toyota and Nissan declined 2.15% and 1.55% respectively.

Elsewhere, in Hong Kong, shares in property developers led losses after global financial service provider Credit Suisse said it was maintaining an ‘underweight’ stance on the Chinese property sector, even after last week’s move to loosen monetary policy.

Hong Kong’s third largest property developer Hang Lung Properties dropped 2.05%, rivals Sino Land Company fell 2.45%, while shares in property investment firm China Overseas Land & Development tumbled 6.1%.

Shares in retailer Esprit Holdings also contributed to losses, plunging 9.8% after its chief financial officer stepped down.

Meanwhile, in Australia shares in commodity producers led losses after the nation’s central bank lowered its benchmark interest rate for a second straight month as Europe’s financial crisis threatens to slow the nation’s commodity exports.

Mining giants BHP Billiton and Rio Tinto saw shares fall 1.5% and 2.15% respectively.

The outlook for European stock markets was downbeat. The EURO STOXX 50 futures pointed to a loss of 0.65%, France’s CAC 40 futures shed 0.55%, the FTSE 100 futures declined 0.8%, while Germany's DAX futures tumbled 1.2%.

Later in the day, the euro zone was to produce revised data on gross domestic product, while Germany was to publish official data on factory orders.