Asian share markets fell on Thursday after a second big sell-off in commodities in less than a week cut investor appetite for riskier investments and boosted the U.S. dollar, although oil prices clawed back some losses in early trade.
Global markets have been regaining ground since a near-record fall in commodities last week, but remain skittish as investors mull issues ranging from a possible Greek debt restructure to signs of a slowdown in China.
An unexpected rise in gasoline stocks and concerns about slowing demand saw oil prices tumble more than 4 percent on Wednesday, triggering a rout across the across the commodities complex that pushed the Reuters/Jeffries CRB index <.CRB>, a broad measure of commodities performance, down 3 percent.
Oil prices partly recovered in Asia, with U.S. crude futures up 1.2 percent at $99.40 and Brent crude up 1.2 percent at $113.89, but U.S. oil prices are still down more than 12 percent on last Monday's close.
There are a lot of hedge funds pulling (commodity) positions. They've been long, and it will be choppy and remain choppy while China is slowing, said Macquarie Equities strategist Neale Goldston-Morris.
But the commodity prices are still at such high levels it's extremely profitable for the companies involved, and the valuations for (big miners) don't anywhere reflect the current commodity prices, he said.
Energy and resource stocks led Asian share markets lower with Japan's benchmark Nikkei 225 <.N225> down 0.8 percent by 0250 GMT. Australia's S&P/ASX 200 <.AXJO> slipped 1.4 percent to a six-week low, and South Korea's Kospi <.KS11> was down 1.2 percent, while MSCI's index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 1.5 percent.
Miners BHP Billiton and Rio Tinto fell more than 2 percent in Australia, while Japan's biggest oil and gas developer Inpex Corp <1605.T> fell 2.9 percent.
Shanghai copper fell as much as 2 percent on Thursday after London copper hit its lowest level since December, later paring losses to be down 0.3 percent.
Bucking the trend, Toyota Motor Corp <7203.T> jumped 2.5 percent after saying that output would begin recovering as much as two months earlier than it had expected as parts makers come back on line, offsetting poor quarterly earnings.
The euro edged higher in Asia after falling to a six-week low against the yen and a three-week low versus the U.S. dollar, on further speculation that Greece will eventually need to restructure its debt.
The broader safe-haven recovery in the dollar was reflected in its rise against a basket of currencies <.DXY> from a three-year low hit last week. The dollar last stood at 75.21, down slightly in Asia.
People have been doing dollar-carry trades and yen-carry trades based on a moderate recovery in the global economy. That money is now flowing back, said Makoto Noji, a senior strategist at SMBC Nikko Securities.
Adding momentum to a sell-off in commodity linked currencies, the Australian dollar tumbled more than 1 percent to a one-week low after surprisingly weak Australian jobs data reduced market expectations of a rate hike.
Gold partly retraced its losses in Asia, adding 0.3 percent to $1,504.79 an ounce, while volatile spot silver added 1.6 percent after sinking nearly 9 percent in the previous session.
U.S. corn futures extended Wednesday's 4 percent plunge on the expectation of higher near-term stocks.