Yen, commodities hit Asian shares

Financial Times:

Traders are taking some riskier bets off the table as further monetary restrictions in China raise fears that one of the world’s main economic engines could slow.

The FTSE All-World index is down 0.4 per cent and industrial commodities are softer as news that Beijing was raising capital requirements for some major banks, in order to cool lending, encourages profit taking, particularly in Asia, after the recent strong run.

US equity futures are down 0.7 per cent. Mainland China stocks are firmer, however, reflecting the fact that they have already underperformed global benchmarks by about 20 per cent so far in 2010.

European bourses are slated to open lower by 0.5 per cent.

Factors to Watch. Early in the European session, the UK will reveal its September consumer price data.

Later, in the US, the third-quarter earnings season gets back under way. Chip bellwether Intel will deliver its numbers after the closing bell.

Before that, traders will be able to get an insight into the deliberations at the Federal Reserve's Open Market Committee’s rate-setting meeting in September when the minutes are released. With markets expecting more quantitative easing at the November meeting, any suggestion that the FOMC was unsure of the need for such action may come as a blow to some.

Asia-Pacific. Shares are trading sharply lower as the yen’s strength weighs on Japanese exporters while commodity shares in Australia are falling after a recent string of gains.

The FTSE Asia-Pacific Index is down 1.3 per cent, hobbled by weak performances in Tokyo – back after Monday’s holiday – and Sydney, off 1.7 per cent and 1.3 per cent respectively.

South Korea’s Kospi index is down 0.7 per cent and India’s Sensex is off 0.9 per cent after the pace of industrial output growth in August disappointed.