Asia stock markets fall as crude oil prices firm

Japan's Nikkei 225 Stock Average lost 1.2 percent to 12,938.50 points--the first time the index has closed under the 13,000 level since July 18.

Hong Kong's blue-chip Hang Seng Index ended 1.5 percent lower at 22,514.92. South Korea and China were down 2 percent or more.

At home and abroad, there were signs of trouble facing the global economy.

Steady oil prices in Monday trade touched off more concerns about inflation and the effect of higher costs on corporate balance sheets.

On Friday, Nissan Motor Co.--Japan's third largest carmaker--reported a nearly 43 percent drop in net profit in the latest quarter, the result of a rising yen and accounting provisions for the declining value of leased vehicles.

In the U.S., meanwhile, jobs and manufacturing data released Friday portrayed an economy that was still sluggish as it entered the second half of the year.

"There is a general malaise about economies slowing down around the world," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "No one seems to be doing well."

Late afternoon in Singapore Monday, the September contract for light, sweet crude oil was near $125 a barrel in electronic trading on the New York Mercantile Exchange.

In Japan, investors continued to sell stocks this week after driving the Nikkei down 2.11 percent Friday.

Automakers fell particularly hard, following news at the end of last week that U.S. auto sales slumped to a 16-year low in July as car makers were unable to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles.

Nissan Motor Co. lost 4.8. Mazda Motor Corp. plunged 8.8 percent after posting a 13 percent drop in North American sales during the month.

Also taking a beating was major trading house Mitsui & Co., which shed 8.6 percent. The company said Monday that its net profit for the first quarter through June fell 43.1 percent.

Banks continued their retreat as well, with Sumitomo Mitsui Financial Group down 6.9 percent and Mizuho Financial Group slumping 4.7 percent.

In China, stocks fell Monday amid mounting skepticism over the prospects for a rally in share prices ahead of the Beijing Olympic games.

The launch of subscriptions for an initial public offering by China Southern Locomotive, the country's biggest train maker, also sapped buying power, analysts said.

The benchmark Shanghai Composite Index fell 2.1 percent to 2,741.74. The Shenzhen Composite Index lost 2.4 percent to 815.81.

China Southern Locomotive's IPO could mean as many as 3 billion new shares on the Shanghai Stock Exchange. With billions of shares already due to begin trading after the expiration of lockup periods, the new offering was straining liquidity, analysts said.

Large capitalized shares were broadly lower, with Baoshan Iron & Steel down 4.9 percent and Industrial & Commercial Bank of China 1.9 percent lower.

Investors sold to lock in profits, seeing little potential for a major rally before the Olympics begin on Friday given the recent spate of bleak economic news from the U.S. and the absence of any significant market-boosting moves by Chinese authorities.

"There are only four days left, so people were taking profits because they all know the start of the Games means the end of any rebound," said Zhai Peng, a strategist for Guotai Junan Securities in Shanghai.

Major refiner Sinopec fell 2.2 percent following unconfirmed reports that it was preparing an offer for London-traded Imperial Energy, an independent oil and gas exploration and production company with holdings mainly in western Siberia.

Imperial Energy later confirmed it had received an approach regarding a cash offer, although it did not identify the company involved.

As in China, airlines and refiners in Hong Kong lost ground as oil rose. Cathay Pacific dropped 1.9 percent and China Southern tumbled 4.8 percent. Sinopec was off 2.3 percent.

Worries about slowing global trade dragged down stocks related to shipping, with port operator Cosco Pacific plunging 5.9 percent and China Shipping Development shedding 4.8 percent.

In currencies, the dollar gained slightly to 107.81 yen late Monday afternoon from 107.68 late Friday. The greenback climbed against the euro, which was trading at $1.5586 from $1.5564.