European markets were expected
to open sharply lower. Financial spreadbetters predicted Britain's FTSE
100 (.FTSE) and Germany's DAX (.GDAXI) to each open down by as much as
1.7 percent, and France's CAC 40 (.FCHI) to open as much as 1.8 percent
lower.
"A lot
of recent data has emphasized that the bottom has not quite fallen out
of the global economy, but a negative feedback loop of self-perpetuating
fear seems to have gripped global markets," Angus Nicholson, market
analyst at IG in Melbourne, wrote in a note.
Global benchmark Brent (LCOc1) was off lows but still down 0.3 percent at $30.22, after marking a fresh 12-year low of $29.73.
U.S.
crude prices (CLc1) added about 1 percent to $30.77 a barrel, but
remained not far from Tuesday's nadir of $29.93, which was their lowest
level since December 2003.
"Perhaps
$30 or just slightly below is acting as a little bit of a floor, but
that being said that's a straw in a hay barn in terms of positivity,"
said Ben le Brun, market analyst at OptionsXpress in Sydney.
"The rest of the news is decidedly negative about oil," he said.
London
copper fell to its lowest since May 2009, compounding worries about the
effect of China's waning growth on demand for commodities. Copper
(CMCU3) was last down nearly flat at $4,392.50 a tonne after earlier
dropping as low as $4,330.
Adding
to the risk-off sentiment, a gun and bomb attack rocked Jakarta, which
helped send the rupiah down around 1 percent against the dollar at one
point to as low as 13,960 (IDR=ID). Indonesia's benchmark stock index
(.JKSE) was down 1.7 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.4 percent.
China's
recently volatile main stock indexes reversed earlier losses, with the
Shanghai Composite Index (.SSEC) trading up 0.9 percent and the CSI300
index up 1.1 percent.
South
Korea's KOSPI (.KS11) slipped 0.9 percent, after the country's central
bank kept interest rates unchanged for a seventh straight month as
expected. The Bank of Korea said it would monitor recent market turmoil
sparked by developments in China as well as the effects of the U.S.
Federal Reserve's December rate hike.
Japan's
Nikkei (.N225) ended off lows but still shed 2.7 percent, as downbeat
domestic data added to the gloom. The yield on the benchmark 10-year
Japanese government bond touched a fresh record low of 0.190 percent.
Japan's
core machinery orders fell 14.4 percent in November from the previous
month, down for the first time in three months and marking a bigger
decline than economists' median estimate for a 7.9 percent drop.
"Investors
are increasingly worried that the (U.S.) market is not strong enough to
withstand an initial view that the Fed would hike rates four times this
year," said Masashi Oda, senior investment officer at Sumitomo Mitsui
Trust Bank.
Boston
Fed President Eric Rosengren sounded a cautious tone overnight, saying
global and U.S. economic growth may be slipping and could force the Fed
into a more gradual course of rate hikes than officials currently
expect.
On
Wednesday, better-than-expected China trade data lifted Asian sentiment
and gave equities and commodities prices a much-needed boost. But those
gains unraveled later in the global session, and major U.S. stock
indexes finished with sharp losses.
The benchmark 10-year U.S. Treasury yield
plumbed its lowest levels since late October as investors sought safety
in government debt. It stood at 2.082 percent in Asian trade, compared
with its U.S. close of 2.066 percent on Wednesday.
Undermined
by lower U.S. yields, the dollar lost ground to its perceived
safe-haven Japanese counterpart, though it clawed some of it back by the
end of the Asian session. It was buying 117.71 (JPY=), down about 0.1
percent. The euro was nearly flat at $1.0873 (EUR=).
Sterling
was steady at $1.4404 (GBP=) ahead of the Bank of England's policy
meeting later in the session that is expected to signal a delay in
hiking interest rates.
Market
participants continued to keep an eye on China's yuan, which weakened
even after the People's Bank of China set its midpoint rate (CNY=SAEC)
at 6.5616 per dollar prior to market open, firmer than the previous fix
of 6.563.
The PBOC has held the line on its currency in the past few days, calming some fears of a sustained depreciation.
By: Lisa Twaronite (Tokyo Reuters).
Additional Reporting: Aaron Sheldrick and Ayai Tomisawa.
Editing: Simon Cameron-Moore and Jacqueline Wong.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For The #FacebookTeam