Asian indices led lower by energy stocks

Asia-Pacific (002790.KS - news) equities were mostly lower on Tuesday after energy prices dropped overnight, sending resource heavy markets such as Australia down to its lowest in more than two and a half years.

Crude oil dropped below $120 per barrel for the first time in three months over concern that the high price of the energy would hurt demand, following negative consumer spending data out of the US. Nymex light sweet crude was trading at $120.01 a barrel for September delivery by late afternoon in Singapore. Copper and platinum hit six-month lows.

The MSCI Asia-Pacific Index had lost 1 per cent to 127.29 by late afternoon in Tokyo.

The Nikkei 225 average closed 0.1 per cent lower at 12,914.66 and the broader Topix index ended 0 per cent lower at 1,247.71. Earlier gains for exporters from a weaker yen overnight were scaled back as the Japanese currency appreciated from around Y108.20 to the dollar to Y107.81 in the afternoon session.

Sony (Munich: 853687 - news) rose by 1.5 per cent to Y4,060 after saying it would invest Y40bn in expanding production of lithium-ion batteries. Toyota Motor (Frankfurt: 853510 - news) gained 0.9 per cent to Y4,500 and Canon (Berlin: CNN1.BE - news) .

The consumer electronics and musical instrument maker Yamaha (Frankfurt: 855314 - news) slid for the third day, hitting a three-year low, after being downgraded by Goldman Sachs (NYSE: GS - news) and Daiwa Institute of Research because last week it cut its forecast of annual profit by 20 per cent. Yamaha plunged 7.3 per cent to close at Y1,750.

Merger talk sent the shares of the consumer credit companies Orix (Frankfurt: 851769 - news) and Credit Saison higher, despite the two lenders denying that they were discussing a deal. Credit Saison jumped 11.2 per cent to Y2,330 and Orix gained 2.6 per cent to Y15,070.

In other alliance talks in Japan, Seven & I Holdings jumped 3.2 per cent to Y3,510, and pharmacy store operator Ain surged 15.1 per cent to Y1,991on the Jasdaq following a local report that the two would form an alliance where Ain would open drug stores in Seven & I's shopping centres.

The news of Mitsubishi UFJ Financial (Berlin: MFZ.BE - news) 's 66 per cent drop in first-quarter profit came after market closed. The shares had ended 1.6 per cent higher at Y915.

In Australia, the S&P/ASX 200 slid to its lowest levels as resource in just over two years, but recovered a little to close 1.4 per cent lower at 4,820.40.

The Australian dollar sank to 92.12 US cents, its weakest level in four months, after the central bank hinted it may cut interest rates for the first time in nearly seven years as weaker economic growth was helping to curb inflation.

BHP Billiton (LSE: BLT.L - news) led Sydney's fall. It plunged 6.6 per cent to A$35.82 as it suffered both from weaker metal prices and cheaper oil, as it is big producer of energy as well as the world's largest miner.

Newcrest Mining (Berlin: NMA.BE - news) , a big gold producer, plummeted 11.5 per cent to A$26.31 as precious metal prices continued to decline. Woodside Petroleum (Berlin: WOPA.BE - news) fell by 5.2 per cent to A$51.20.

The chemical company Campbell Brothers surged Campbell Brothers rose by 15.2 per cent to A$31.23 after it said first-half profit would jump about 60 per cent and that the increase could be sustained for rest of the financial year.

Hong Kong shares sank to their lowest levels in more than two weeks as the company with the biggest weight in the Hang Seng (news) index, the bank HSBC (LSE: HSBA.L - news) , announced a 28 per cent fall in first half profit as subprime mortgage defaults in the US rose.

The Hang Seng index closed 2.5 per cent lower at 21,949.75 and the main sub-index of mainland companies listed in the territory was 2.8 per cent lower at 11,947.64

HSBC fell by 2.2 per cent to HK$126.60 as Royal Bank of Scotland (LSE: 91ID.L - news) advised investors to sell the shares instead of holding them. HSBC's results had been announced after the Hong Kong market had closed on Monday.

Other banks suffered. Bank Of East Asia (0023.HK - news) plunged 8.3 per cent to HK$33.20 to a two-year low after half-year profits halved. Bank of China (3988.HK - news) fell by 1.4 per cent to HK$3.50.

The territory's stock market operator, Hong Kong Exchanges & Clearing, lost 4.7 per cent to HK$108.50 after Goldman Sachs cut its estimate for the share price by 10 per cent.

Cnooc (0883.HK - news) , which is China's largest offshore oil producer, plunged 6.3 per cent to HK$10.80 and China Oilfield Services (601808.SS - news) fell by 5.0 per cent to HK$10.72.

On the mainland, the Shanghai composite index closed 1.9 per cent lower at 2,690.75. Energy stocks led the market lower. China Shenhua Energy, an integrated coal and transport company, plunged 6.4 per cent to Rmb28.39, China Coal Energy fell by 6.3 per cent to Rmb11.96 and PetroChina lost 1.3 per cent to Rmb14.68..

In India, the Sensex was 1.7 per cent higher by mid afternoon in Mumbai at 14,823.49.

ICICI Bank made the biggest gains, rising by 3.9 per cent to Rs665.60.

Indonesia's stock exchange was forced to delay the start of trading due to a technical hitch, but resumed later in the morning. The Jakarta Composite index closed 2.9 per cent lower at 2,164.19