Asian stocks mostly lower, early losses trimmed

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HONG KONG: Asian stocks were mostly lower Thursday but all had clawed back most of their earlier losses as traders went bargain-hunting despite huge falls in Europe and on Wall Street.

Gold also eased slightly from its record high after breaching the $1,800 barrier for the first time, but the yen edged towards a fresh high against the dollar as dealers poured into safe haven assets.

Tokyo was 1.04 percent lower in the afternoon, Hong Kong fell 1.45 percent by the break and Sydney was down 0.10 percent.

But Shanghai gained 0.43 percent and Seoul, which had earlier lost about four percent, was 0.68 percent higher.

Regional markets were off their morning lows Thursday, which came after Wall Street slumped -- with each of the three main indexes losing more than four percent -- and Europe was battered by renewed fears over US and eurozone debt.

European woes were reignited on Wednesday when rumours circulated that France was in danger of seeing its top-notch credit downgraded, following last week's historic cut to the United States' rating.

Amplifying the debt woes was a Fitch downgrade of Cyprus and comment that the eurozone nation would need an EU bailout.

And Greece stoked the fire when an official said the term for the exchange of bonds under its new rescue plan might have to stretch out beyond 2020 -- longer than had been planned.

Such a move would hit the banks and insurers that had already agreed to an effective haircut on their Greek bonds.

French President Nicolas Sarkozy cut short his holiday to announce new moves to slash France's massive debt while the downgrade was quickly denied, but it failed to prevent steep selloffs across Europe, which was led by banks.

London's FTSE-100 fell 3.05 percent, the Paris CAC-40 plunged 5.45 percent and in Frankfurt the DAX dived 5.13 percent. The Madrid Ibex-35 tumbled 5.49 percent and Milan's FTSE MIB fell 6.65 percent.

The pattern was repeated in the United States where the Dow Jones Industrial Average lost 4.62 percent, with the broader S&P 500 falling 4.42 percent and the Nasdaq shedding 4.09 percent.

"In essence, there's still a lot of fear in the market," said CMC Markets chief strategist Michael McCarthy in Australia.

Asian markets have suffered a rollercoaster week, tumbling from Friday to Tuesday on eurozone fears and the US debt downgrade before rebounding Wednesday after the US said it would hold rates at record lows for two years.

The sell-off Thursday morning came as gold surged to a record $1,814.50-$1,815.50 an ounce in Sydney trade, with investors looking for a safe place to park their money. However, it eased slightly to open in Hong Kong at $1,805.00-$1,804.00.

The yen, another safe-haven, moved towards its post-World War II high 76.25 to the dollar, which it hit in the turbulent week after Japan's March 11 quake and tsunami disaster.

In early trade the dollar bought 76.60 yen, down from 76.83 yen in New York late Wednesday.

Japanese Finance Minister Yoshihiko Noda reiterated that he remained attentive to financial markets and had an eye on the yen, a week after the government stepped into the forex market to stem the unit's rise.

"I think one-sided movements (in the forex market) are continuing," Noda said shortly before the market opened.

"I'll continue to watch the market today with keen awareness."

Prime Minister Naoto Kan, in a televised legislative committee meeting, echoed Noda's comment, saying: "We will closely monitor the market and think about ways to deal with it."

Elsewhere in currency markets, the euro firmed to $1.4214 from $1.4168, but fell slightly to 108.87 yen from 108.91 yen.

Oil prices followed equities lower, with New York's main contract, light sweet crude for delivery in September, dipping 79 cents to $82.10 per barrel.

Brent North Sea crude for September fell $1.10 to $105.58. (AFP)