Asian share markets fell on Wednesday as year-end trade dwindled, with profit-taking pulling down stocks in Australia and bankruptcy worries about Japan Airlines Corp <9205.T> weighing on the Nikkei, but the dollar rose broadly.
In a reminder of the continued fallout from the global economic crisis, shares of Japan Airlines <9205.T> tumbled to a record low on growing investor worries that the struggling carrier will be restructured in bankruptcy court as part of a state bailout.
Japan's Nikkei average <.N225> slipped 0.3 percent after briefly touching a four-month high, with JAL shares plunging 32 percent at one point to 60 yen.
Corporate debt problems also hit shares in South Kora, where the benchmark index <.KS11> fell 0.3 percent. Losses were led by companies in the Kumho Asiana Group and banks following reports that flagship units of South Korea's ninth-biggest business group could be put under creditor-led debt restructuring.
Shares in Kumho Tire <072240.KS> and Kumho Industrial <002990.KS> both plunged by their daily limit of 15 percent.
Markets are under pressure on what would otherwise have been a fairly calm day, as shares related to Kumho Asiana Group are tanking amid deepening fears about the group's financial health, said Song Kyung-keun, a market analyst at Dongbu Securities.
But from what I am hearing decisions are quickly being made, and we will probably hear details about some sort of debt restructuring plans soon, which is helping contain worries, Song said.
The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> fell 0.4 percent, edging further from its 2009 high set in November but still up more than 60 percent on the year.
Many analysts expect stocks to rise further in 2010 as the global economy continues to mend, but gains are likely to be at a much slower pace.
Shares in Hong Kong <.HSI> fell 0.4 percent but bucking the trend was the Shanghai stock market <.SSEC>, which rose 0.6 percent.
Australian stocks rose to their highest in nearly 10 weeks early but quickly retreated to slip 0.2 percent <.AXJO>, with profit-taking at the year-end.
U.S. stocks slipped overnight, breaking a six-day string of gains as investors found little reason to buy stocks as the year's end approached. Data showing a rise in consumer confidence was offset by a housing report pointing to more bumps in the road to a sustained economic recovery. <.N>
The dollar hit a two-month high at 92.26 yen, keeping the firmer tone it has developed recently on shifting sentiment about the outlook for U.S. interest rates.
The main question for the currency market going into 2010 is when the Federal Reserve will start to tighten policy.
Improved U.S. data in the past month has prompted many market watchers to review their forecasts for when rates might start to rise, lifting the dollar up from a 14-year low against the yen and reviving its fortunes against other major currencies.
The market is shifting its focus to the recently emerged theme of whether the Fed exit strategy will be sooner than expected. And it will closely scrutinize upcoming U.S. economic data, said Kazuyuki Takami, senior manager at the foreign exchange trading department at Bank of Tokyo-Mitsubishi UFJ.
The euro fell 0.3 percent to $1.4307.
Oil drifted further off $80 a barrel, weighed down by the dollar's gains and doubts whether predictions for a weekly fall in government-monitored U.S. crude stockpiles will come true, after a private-sector report showed an unexpected rise. U.S. crude for February delivery stood at $78.78 a barrel.
Gold prices steadied at $1,093.30 per ounce, after snapping a three-session winning streak the day before when the dollar's rise curbed bullion's appeal as a currency alternative.
Spot gold had tumbled to a seven-week low of $1,074.10 an ounce last week before the holiday break.
(Additional reporting by Jungyoun Park in Seoul, Elaine Lies in Tokyo)
(Editing by Kim Coghill)