Asian stocks fell on Friday as oil prices resumed their record-breaking rally, underscoring investor concerns that high energy prices will hurt corporate earnings. The share market falls followed the biggest drop in U.S. stocks in nearly a year. The dollar was steady, with dealers awaiting key U.S. jobs data later in the day to gauge the strength of the world's largest economy ahead of a Federal Reserve meeting on interest rate policy on Tuesday. Gold prices slipped, while Japanese government bonds hit two-month highs. Oil hit $44.73 a barrel, the highest since New York crude futures were launched in 1983, after a fire at a big U.S. refinery underlined the vulnerability of supplies at a time when global demand is accelerating at its fastest pace in more than 20 years.
Most Asian stock markets fell, with the Nikkei stock average <.N225> dropping nearly 1 percent by midday to 10,954.20, weighed down by a 2.3 percent fall in Honda Motor <7267.T>. "Higher oil prices have been chilling investors' sentiment, and now investors have started talking about how that would affect the global economy," said Kenichi Azuma, an equity strategist at Cosmo Securities. "It's also making it difficult to assess the U.S. economic outlook." MSCI's broadest index of Asia Pacific shares outside Japan <.MSCIAPJ> had fallen 0.4 percent by 0230 GMT. The dollar was at 111.72 yen , barely changed from late U.S. levels and around 0.6 percent above its level in late Asian trade on Thursday. The euro stood around $1.2055 . The market had factored in a rise of 200,000 to 250,000 jobs in July data, traders said. The figure would need to be somewhat higher to spark serious dollar buying.
FIRE FUELS OIL RALLY
Oil's latest rally came after a fire shut a gasoline-producing unit at BP Plc.'s 470,000 barrel-per-day refinery in Texas, the third-biggest plant in the United States. The fire was extinguished but a company spokesman said it was not clear how long the ultracracker unit would be closed. World oil prices, which have risen more than a third this year, rebounded on Thursday after the Russian government barred oil major YUKOS from access to its bank accounts, threatening the company's ability to continue exports and rattling U.S. markets. The Standard & Poor's 500 Index tumbled 1.63 percent, its steepest decline since September 2003, while the Dow Jones industrial average <.DJI> had its second-worst day of the year, falling 1.61 percent. The tech-heavy Nasdaq <.DJI> dropped 1.8 percent. Concerns over record oil prices and their impact on global economic growth saw investors dump Asian shares such as Canon Inc. <7751.T>, which relies heavily on revenues from overseas. Canon fell 1.2 percent and electronics giant Sony Corp. <6758.T> fell 1 percent. Toyota Motor Co. <7203.T> dropped 1.6 percent, helping drag the motoring sub-index <.ITEQP.T> down 1.5 percent. Shares fell 0.6 percent in Hong Kong <.HSI> and 0.2 percent in Australia <.AXJO> and Singapore <.STI>. Stock benchmarks in South Korea <.KS11> and Taiwan <.TWII> were flat. Japanese government bonds rose, pushing the yield on the benchmark 262nd 10-year bond <0#JPTSY=JBTC> down three basis points to a two-month low of 1.695 percent. Gold fell to $391.75 an ounce against $392.60 last quoted in New York.///