Asia stocks down as plunging oil prices hammer energy firms

HONG KONG: Asian energy firms extended a global sell-off Wednesday, dragging regional equity markets, as oil prices continued to tumble on the back of warnings of slowing demand and rising stockpiles.

Both main contracts were down more than one percent as investors were spooked after the International Energy Agency (IEA) cut its forecast for crude consumption, saying recovering prices and a mild early winter were weighing on purchases.

The Paris-based group said the sector would likely be oversupplied in the last three months of the year and 2018, while the US industry body announced a huge jump in stockpiles last week.

The news comes after recent gains in crude fuelled by a production cut by the OPEC cartel and a brewing crisis in the Middle East between Saudi Arabia and Iran.

"The long-awaited short-term correction in oil prices finally occurred overnight," said OANDA senior market analyst Jeffrey Halley.

"Given the bullish run and extended long positioning across commodities in general in recent times, it was only going to (take) one straw to break the camel's back."

The losses in oil prices -- which follow Tuesday's 1.9 percent fall in WTI and 1.5 percent drop in Brent -- battered Asian energy firms.

Among the biggest losers Tokyo-listed Inpex dived 3.7 percent and Japan Petroleum Exploration tumbled 4.2 percent, while PetroChina and CNOOC in Hong Kong each plunged 3.3 percent. Woodside Petroleum sank 1.4 percent in Sydney, while Rio Tinto was 2.7 percent lower.

- US tax worries -

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The sell-off filtered through to wider stock markets, which have been on a broad decline since hitting multi-year highs last week.

Tokyo plunged 1.6 percent, with a stronger yen and a slight slowdown in Japanese economic growth adding to the waning optimism. The Nikkei had ended at a quarter-century high last Thursday.

Hong Kong lost 0.7 percent, Shanghai shed 0.8 percent, Sydney was 0.6 percent off and Singapore gave up 0.8 percent. Seoul eased 0.3 percent, Manila dropped 1.4 percent and Taipei was 0.5 percent lower.

The retreat followed fresh losses on Wall Street, where all three main indexes have succumbed to profit-taking after last week hitting record highs.

US dealers are also concerned about Donald Trump's tax cuts as Republican lawmakers struggle to agree on a unified plan, which has led to speculation the legislation could fail in a similar way to the healthcare overhaul.

On currency markets the euro held most of its gains after surging on Tuesday in response to better-than-expected German growth figures. The single currency briefly broke above $1.18 in early trade before easing back slightly.

The pound, however, remains weak on uncertainty about the political future of Britain's Prime Minister Theresa May as her government struggles along with Brexit talks.

- Key figures around 0720 GMT -

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Oil - West Texas Intermediate: DOWN 63 cents at $55.07 per barrel

Oil - Brent North Sea: DOWN 78 cents at $61.43

Tokyo - Nikkei 225: DOWN 1.6 percent at 22,028.32 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 28,949.65

Shanghai - Composite: DOWN 0.8 percent at 3,402.52 (close)

Euro/dollar: DOWN at $1.1790 from $1.1792 at 2145 GMT

Dollar/yen: DOWN at 113.18 yen from 113.43 yen

Pound/dollar: DOWN at $1.3140 from $1.3166

New York - DOW: DOWN 0.1 percent at 23,409.47 (close)

London - FTSE 100: FLAT at 7,414.42 (close)