Asian stocks stumble as gloomy China, Japan data add to growth worries, STI down 1.1%

A pedestrian holding an umbrella holds a mobile device in front of an electronic stock board displaying the closing figure of the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan, on Wednesday, Sept. 9, 2015.
A pedestrian holding an umbrella holds a mobile device in front of an electronic stock board displaying the closing figure of the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan, on Wednesday, Sept. 9, 2015. PHOTO: BLOOMBERG

TOKYO (Reuters) - Asian stocks fell on Thursday (Sept 10) after lacklustre Chinese and Japanese economic data added to heightened worries about slackening global growth, sapping investors' appetite for riskier assets.

With the fresh slide in Asian equities, spreadbetters forecast a lower open for Britain's FTSE, Germany's DAX and France's CAC.

The latest policy response to rising global risks came from the Reserve Bank of New Zealand (RBNZ), which cut its benchmark rate by 25 basis points to 2.75 per cent and signalled more easing if China's economy slows further.

Those risks were highlighted in Thursday's data. China's consumer inflation in August edged up, but producer prices fell for the 42nd straight month in the latest sign that deflation remains a significant risk for the world's second-largest economy.

Furthermore, Japan's key gauge of capital spending unexpectedly fell for a second straight month in July, signalling that the economy is struggling to get back on track after contracting in the second quarter.

With many economies facing headwinds, ANZ bank economists revised down their global growth forecasts for 2016 and 2017, expecting growth to remain around 3.5 per cent "over the next couple of years." "Previously we had growth edging up to 4 pe rcent by 2017. In the near term the risks are skewed to further downward revision," the economists at ANZ wrote.

Amid the sombre mood, the previous day's policy-hopes driven surge in the Shanghai Composite Index flagged and the shares fell were down 0.4 per cent. The losses were limited for now, however, as soft indicators fanned expectations for extra government stimulus.

The Straits Times Index was down 1.13 per cent to 2,894.97 as of 1:58 pm.

MSCI's broadest index of Asia-Pacific shares outside Japan was 1.4 per cent lower after rallying 3.2 per cent on Wednesday. South Korea's Kospi bucked the trend and rose 0.6 per cent. Australian shares fell 2.0 per cent, weighed down by sagging banking stocks.

"I think those Chinese concerns are still front and centre,"said Damien Boey, equity strategist at Credit Suisse in Sydney. "It's not just Australian banks, it's developed world banks that are actually taking a hit on China concerns," Mr Boey said.

Tokyo's Nikkei fell 2.7 per cent in the wake of the downbeat Japanese machinery orders numbers, after jumping 7.7 per cent the day before amid hopes for fresh government stimulus.

"The Bank of Japan may ease policy further in October, but additional easing would not be enough to achieve its inflation target," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

Elsewhere, Standard & Poor's stripped Brazil of its investment-grade credit rating on Wednesday, further hampering President Dilma Rousseff's efforts to regain market trust and pull Latin America's largest economy from recession.

While the RBNZ rate cut was widely anticipated, the central bank also said a further fall by the New Zealand dollar was "appropriate", sending the kiwi buckling.

The New Zealand dollar dived about 2 per cent and last fetched 62.78 US cents, moving back towards a 6-year low of 62 US cents struck late in August.

The Australian dollar suffered collateral damage and retreated 0.3 per cent to 69.96 US cents.

The US dollar was little changed at 120.60 yen and the euro was steady at US$1.1211.

Downbeat data from Asia's largest economies weighed on oil, with US crude sliding 0.7 per cent to US$43.85 a barrel after a bruising 4 per cent decline overnight.

Oil prices are off more than 50 per cent since June 2014, with a global supply glut also weighing heavily on the commodity.

In recent weeks, oil rallied in volatile trading after falling to 6-1/2-year lows when a stock market slide in China sent global equities and commodities prices tumbling.