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Asian stock markets tumble after dour US employment numbers revive fears of recession
BANGKOK (AP) ' Asian stock markets took a beating Monday after U.S. companies stopped hiring in August, reviving fears that the world's largest economy is heading back into recession.
Oil prices extended losses to below $86 a barrel as the dismal jobs report suggested that a weak U.S. economy will lessen demand for crude. The dollar was higher against the yen and the euro.
Japan's Nikkei 225 stock average was down 2 percent at 8,772.91 with sentiment also undermined by the persistent strength of the yen against the dollar, which hurts exporters.
Australia's S&P/ASX 200 fell 2.5 percent to 4,137.60 and South Korea's Kospi slid 3.8 percent to 1,796.77. Hong Kong's Hang Seng dropped 2.2 percent to 19,775.01. Benchmarks in Singapore, Taiwan, the Philippines and mainland China were also down.
Companies that particularly count on brisk economic growth to fuel their revenues were hit hard. Japan's Hitachi Construction Machinery plunged 5 percent. Energy Resources of Australia Ltd. tumbled 4.7 percent. Mazda Motor Corp., which counts on the U.S. as a key export market, dived 4.3 percent.
Hong Kong-listed China National Offshore Oil Corp., or CNOOC, plummeted 7.7 percent after operations were suspended at an oil field in Bohai Bay that has drawn sharp criticism over oil spills. The project is a venture between CNOOC and the China arm of ConocoPhillips.
Investors were sticking to the sidelines as expectations mounted that the U.S. Federal Reserve would take action at its September meeting to support the economy ' perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.
"Right now the possibility has increased," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "I think they have to do something. The markets are expecting QE3."
The Dow Jones industrial average closed 2.2 percent lower Friday, wiping out its gain for the week, on the heels of the Labor Department reported that no jobs were added in the U.S. in August. It was the worst employment report in 11 months and renewed fears that another recession could be on the way.
The lack of hiring in the U.S. last month surprised investors. Economists were expecting 93,000 jobs to be added. Previously reported hiring figures for June and July were revised lower. The average work week declined and hourly earnings fell. The unemployment rate held steady at 9.1 percent. The rate has been above 9 percent in all but two months since May 2009.
The jobs crisis has led President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring.
DBS Bank Ltd. in Singapore said in a research report that Fed Chairman Ben Bernanke indicated at a conference last month that extraordinarily high long-term unemployment was the "real problem facing the US economy."
The Dow Jones industrial average lost 253.31 points to close at 11,240.26. It was the biggest fall in two weeks. The Standard & Poor's 500 index fell 2.5 percent to 1,173.97. The Nasdaq composite fell 2.6 percent to 2,480.33.
The sour jobs report came on top of Europe's debt problems, which are still dragging on. Meanwhile, China's economy is showing signs of slower growth.
Those problems could weaken global demand for many kinds of commodities including oil and metals. Inpex Corp., Japan's leading energy explorer, sank 5.2 percent.
Investors seeking a relatively stable store of value during times of economic turbulence in financial markets have been scooping up gold, sending its price up 50 percent over the past year. As such, gold-related shares were among the few posting gains Monday. Australia's Newcrest Mining Ltd., the country's top gold miner, rose 1.2 percent.
In currencies, the euro weakened to $1.4162 from $1.4187 in New York late Friday. The dollar was slightly higher at 76.75 yen from 76.72 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.
Benchmark oil for October delivery was down 65 cents to $85.80 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.
In London, Brent crude for October delivery was down 84 cents at $111.49 on the ICE Futures exchange.