China and Hong Kong stocks extend losses at open, STI down 0.9%

HONG KONG (AFP, REUTERS) - Shanghai and Hong Kong shares extended losses from the previous day on Tuesday (Sept 15) as investors fret over the Chinese economy following the latest batch of disappointing data out of Beijing at the weekend.

In Shanghai, the benchmark composite index lost 2.28 per cent while the Shenzhen Composite Index, which tracks stocks on China's second exchange, gave up 2.79 per cent.

The benchmark Hang Seng Index in Hong Kong slipped 0.16 per cent.

Japanese shares ralled as the yen weakened amid speculation Bank of Japan policy makers will signal the possibility of more stimulus after a meeting on Tuesday.

The MSCI Asia Pacific Index added 0.6 per cent by 10:01 am in Tokyo, as Japan's Topix index advanced 1.7 per cent, erasing Monday's declines. The yen fell for the first time in three days, losing 0.3 per cent.

The Straits Times Index opened lower and was trading 0.89 per cent down at 2,845.90 as of 9:51 am.

Standard & Poor's 500 Index futures rose 0.2 per cent after the gauge dropped 0.4 per cent in New York, while Australian shares retreated.

A few investors were betting that Japan's central bank would muster additional easing measures. But the majority believe that the BOJ will simply warn of heightening global risks while holding off on actual stimulus, holding its fire in case the Fed's long-awaited rate hike, whenever it comes, triggers a fresh wave of market turmoil.

"It seems logical that they would want to see the wash up from this week's Federal Reserve meeting and hold the ability to be reactionary," Chris Weston, chief market strategist at IG, said in a note. "If we see anything from Mr. Kuroda and the BOJ today, it will be setting the scene for additional measures if they so need," he said.

The conclusion of the Fed's two-day meeting on Thursday remained the market's key focus, with many economists now believing that volatile global markets and increasing evidence of slowing momentum in China will prevent the US central bank from raising interest rates for the first time since 2006.

A Reuters poll of 72 economists last week showed a slight majority expect an interest rate rise from the current 0-0.25 per cent, but a smaller sample saw just a 50-50 chance.

Australia's dollar rose to its strongest level this month after Prime Minister Tony Abbott was ousted by one of his ministers, with concern over the commodity-driven economy mounting amid China's slowdown.

The Aussie climbed for a seventh straight day as the currencies from Singapore to South Korea gained at least 0.2 per cent.

In commodities, crude oil futures clawed back some ground lost in the previous session.

US crude rose about 0.8 per cent to US$44.33 a barrel, underpinned by data showing a drop in US supplies. It shed 1.4 per cent on Monday.

Brent crude added about 0.7 per cent to US$46.69, after skidding 3.7 per cent to its lowest settlement in two weeks.

Spot gold edged up slightly to US$1,108.86 an ounce, moving away from last week's one-month low.