Limp US growth hurts Asia stocks

ASIAN markets were adrift today after limp economic growth in the US rocked faith in an export-led recovery in the region.

Japanese stocks were also under pressure from heavy foreign selling as US investment houses repatriated funds to shore up the damage the fall in the Dow has done to their portfolios at home.

The Nikkei 225 Average slipped 84.43 points to close at 9793.5 after US gross domestic product grew by only 1.1% in the second quarter, half the rate expected by analysts. First-quarter growth was revised down from 6.1% to 5%, fuelling fears that the US recovery is going to be a longer process than many investors had expected.

This was bad news for stocks in technology companies that depend on US custom. Big fallers in Tokyo included Toshiba and Sharp, which lost about 5%.

Last month's fall in stock prices, which has taken the Nikkei to within 4% of its February low of 9420, was partly fuelled by heavy selling by overseas investors, according to the Ministry of Finance.

Net foreign selling during the month was 402bn yen (£2.1bn) and the outflow accelerated throughout the month until it reached 21.2bn yen last week, 10 times the amount of selling in the previous week.

Investors have found little to reverse the outflow resulting from recent quarterly earnings figures from electronics companies which were below, or at the bottom end, of analysts forecasts. An exception was Pioneer, a supplier of DVDs and flatscreen TVs, where buoyant results boosted the stock more than 7%.

Trade in Hong Kong was dominated by the mixed performance of bank shares ahead of the interim results season. Investors are expecting some grim insights into bad loans and delinquent credit-card payments as the economy battles with recession and unemployment has soared to a record 7.7%.

Shares of Bank of East Asia, the territory's third largest lender, fell almost 2% ahead of its earnings statement due today but HSBC Holdings continued to pull back from recent lows, and added 25 cents to HK$88.75. The Hang Seng index gained 36.12 points to 10,303.48.

South Korean investors were shaken by a police raid on the offices of S-Oil and the arrest of executives on allegations that they had overstated earnings. The shares lost almost 2%, as the Kospi index fell by 7.19 points to 710.80.

Hits on technology stocks in South Korea following the US GDP figures and an overnight fall on the Philadelphia Semiconductor index were repeated in Taiwan, although the Weighted Average index struggled to a gain of 0.51 at 4940.89.

Sydney stocks drifted lower as investors sought direction, and the All Ordinaries index closed 8.5 points down at 3024.1. Bank shares benefited from their safe-haven reputation, but gains were limited, while among mining shares, Aurion-Gold fell after rejecting the latest Placerdome offer.

Singapore investors continued to put their faith in the US economy lifting their exporting stocks, and the Straits Times index added 6.66 points at 1515.02.

Malaysian investors did not share their neighbours' confidence, and the Kuala Lumpur Composite index was off 1.21 points at 720.38. Thailand's SET index added 2.36 points at 378.38, and Indonesia's Jakarta Composite edged up 0.47 to 464.14.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.