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ASIA MARKETS: Nikkei Snaps Winning Streak As Tensions Drag On Asian Stocks

11/25/2015 | 04:04am US/Eastern

By Chao Deng

Energy sector lifted by overnight gains for oil

Most Asian markets slipped Wednesday amid escalating geopolitical tensions, after Turkish military shot down a Russian jet fighter, though a rise in oil prices overnight lifted some energy shares in the region.

The Nikkei Stock Average closed down for the first time in four days, off 0.4%, at 19,847.58, in light trading. The benchmark has risen almost 20% in less than two months.

Australia's S&P/ASX 200 was down 0.6% at 5,193.7. Its energy sector rose 0.9%.

South Korea's Kospi lost 0.3%, and Hong Kong's Hang Seng Index fell 0.4%.

   The Shanghai Composite Index   rose 0.9%. 

Crude oil futures steadied Wednesday in Asia amid renewed concerns about a global surplus, after climbing nearly 3% overnight. Metals that sank to multiyear lows earlier in the week also surged overnight, but have pared gains in Asian trading.

On Tuesday, Turkey shot down a Russian jet fighter (http://www.marketwatch.com/story/turkey-shoots-down-likely-russian-jet-near-syrian-border-2015-11-24) along the Syrian border, an incident that threatens to undercut growing efforts to create a new international coalition to confront expanding Islamic State terrorism. The Middle East is the world's most prolific oil-producing region, though Syria itself produces very little oil.

"While the dispute between Turkey and Russia is unlikely to escalate into a hot conflict, it does underline the unresolved tensions over how to put an end to the unrest in Syria and Iraq," said Angus Nicholson, market analyst with brokerage IG. "This uncertainty around a further escalation of the conflict in the Middle East has hung heavily over Asian markets."

Energy shares

Australian energy shares gained on the oil-price moves overnight. Santos Ltd. (SSLTY) (SSLTY) and Origin Energy Ltd. (>> Origin Energy Ltd) gained 3.5% and 3.1%, respectively, while AWE Ltd. rose 3.4% and Liquefied Natural Gas Ltd. (>> Liquefied Natural Gas Ltd) advanced 7.4%.

In Hong Kong oil producers, Cnooc Ltd. (>> CNOOC Ltd) (>> CNOOC Ltd) rose 3.4% and PetroChina Co. (>> PetroChina Company Limited) (>> PetroChina Company Limited) rose 0.4%. In Japan, oil and gas developer Inpex Corp. (>> Inpex Corp) rose 1.2%, and oil refiner Idemitsu Kosan Co. (>> Idemitsu Kosan Co., Ltd.) rose 2.0%.

Rising oil overnight also pressured Asian airline stocks Wednesday, with shares of Cathay Pacific Airways Ltd. (>> Cathay Pacific Airways Limited) (>> Cathay Pacific Airways Limited) down 1.9%, Qantas Airways Ltd. (>> Qantas Airways Limited) down 1.6% and Japan Airlines Co. (>> Japan Airlines Co Ltd) 0.9% lower.

Asian government bonds gained, as investors sought havens assets, after a rally in U.S. Treasury yields overnight.

Australia's benchmark 10-year government bond yield fell to 2.88% Wednesday from 2.94% a day earlier. Ten-year yields on Thailand's government bonds dropped to 2.76% from 2.82% Tuesday. Yields fall as prices rise.

The Japanese yen , another asset sought during geopolitical uncertainty, gained 0.2% against the U.S. dollar Wednesday, at Yen122.23 a dollar. The currency reached its strongest level in more than a week in earlier trading, at Yen122.23 per U.S. dollar.

The local currency's strength pressured shares of Japanese exporters like smartphone parts maker Alps Electric Co. (>> Alps Electric Co Ltd) , which fell 4.0%, and agrochemicals exporter Nippon Soda Co. (>> Nippon Soda Co., Ltd.) , which also fell 4.0%.

Metals moves

Meanwhile, some metals that surged overnight have retreated.

Copper was last down 0.8% from the opening price to $4,569 a ton on Wednesday. The London Metal Exchange's three-month copper contract gained 2.6% to $4,608 a metric ton Tuesday, having hit a six-year low earlier in the week.

Nickel fell 0.5% to $8,740 a ton compared with its open on Wednesday. The metal closed up 5.7% at $8,770 a ton on Tuesday.

Mining shares remained under pressure after iron-ore prices lost 1.8% on Tuesday to $43.40 a ton, the lowest level in the seven years the Steel Index has been publishing reference prices on the market.

Rio Tinto Ltd. (>> Rio Tinto plc) (>> Rio Tinto plc) (>> Rio Tinto plc) fell 0.6%, BHP Billiton Ltd. (>> BHP Billiton Limited) (>> BHP Billiton plc) (>> BHP Billiton Limited) lost 0.2%, and Fortescue Metals Group Ltd. (>> Fortescue Metals Group Limited) lost 1.4%.

Shares of Citic Securities fell 1% in Shanghai (>> CITIC Securities Company Limited) and gained 0.2% in Hong Kong (>> CITIC Securities Company Limited) , after the Securities Association of China said in a report published on November 24 that China's largest brokerage overstated its equity swap transactions between April and September by 1.06 trillion yuan ($165.9 billion). The association, which is partly overseen by China's stock regulator, said it is further investigating the case, and will impose punishment if any violation of rules and regulations is confirmed.

In China, technology firms listed in Shanghai and Shenzhen rose 3.7%, according to a sector gauge by Citic Securities. The sector rose on expectations that the Chinese government will introduce new guidelines for the robotics sector before year-end, and possibly give it financial support. The ChiNext Price Index , representing tech startups, gained 2.9%.

The region also remains focused on the European Central Bank, which is expected to boost stimulus as it battles low inflation, and the Federal Reserve, which is expected to raise interest rates next month.

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