CANBERA (dpa-AFX) - Most Asian stocks retreated on Wednesday, with markets in Australia, Hong Kong, Singapore and Taiwan bearing the brunt of the selling, after U.S. stocks fell sharply to hit a three-week low overnight in reaction to falling oil prices, weak Chinese and U.K. manufacturing data and downgrades to GDP and inflation forecasts from the European Commission.
The major U.S. averages fell between 0.8 percent and 1.1 percent on Tuesday even as automakers posted strong sales in April after a slow start to the year. While the dollar's rebound undermined demand for most commodities and Asian currencies, oil prices held steady after two days of steep declines.
All 100,000 residents of the Canadian city of Fort McMurray, the home to Canada's oil sands region, have been ordered to leave town after a massive fire whipped by high winds engulfed homes and sent ash raining down on residents.
Chinese shares closed largely unchanged despite resource shares coming under selling pressure in the wake of a regulatory crackdown to curb speculation in commodities markets. The benchmark Shanghai Composite index slipped 1.37 points or 0.05 percent to 2,991.27 while Hong Kong's Hang Seng index dropped 151.11 points or 0.73 percent to extend declines for the third day.
China cut its yuan fixing against the US dollar by the most since its devaluation last August, as the dollar index rebounded from its multi-month low on concerns about the Federal Reserve hiking rates in June and lingering worries about the Brexit referendum.
Australian shares fell sharply as Brazilian prosecutors filed a civil suit worth 155 billion reais ($58 billion) against Vale, BHP Billiton and their iron ore joint venture Samarco Mineracao, and a rate cut from the Reserve Bank of Australia on Tuesday underlined increasing nervousness among policymakers to fight deflation and counter slow growth.
The benchmark S&P/ASX 200 dropped 82.70 points or 1.54 percent to 5,271.10 after rallying 2.1 percent to hit its highest level in over 6 months on Tuesday. The broader All Ordinaries index fell 79.40 points or 1.47 percent to 5,335.60.
Mining giant BHP Billiton plummeted 9.4 percent on concerns the penalties associated with the Samarco dam disaster may be worse than initially thought. Rival Rio Tinto slumped 7.5 percent and Fortescue Metals Group tumbled 4.9 percent as iron ore futures tumbled on signs of rising port inventories in China.
Gold miner Newcrest Mining lost 4.6 percent and Evolution Mining shed 6.6 percent as gold prices turned lower after nearing a 15-mongh high. Energy stocks Oil Search, Origin Energy, Woodside Petroleum and Santos slumped 4-9 percent after oil prices fell around 2.5 percent overnight to extend declines for a second day on renewed worries about the global glut.
Lender ANZ closed 0.6 percent lower after cutting its home loan rate, while rivals Commonwealth, NAB and Westpac fell between 0.6 percent and 1.2 percent. Supermarket giant Woolworths fell as much as 7 percent after Standard & Poor's cut its credit rating following poor sales figures.
In economic releases, the Australian Industry Group's performance of services index rose in April to 49.7 from 49.5 in March, suggesting activity levels have stabilized.
Seoul shares drifted lower and the South Korean won dropped to its lowest level in near three weeks, as global growth worries pushed investors to the sidelines ahead of public holidays on Thursday and Friday. The benchmark Kospi average slid 9.70 points or 0.49 percent to 1,976.71, with commodity-related stocks pacing the declines.
Steelmaker POSCO tumbled 4.6 percent and rival Hyundai Steel lost over 6 percent while Korea Zinc declined 2.3 percent. Market heavyweight Samsung Electronics advanced 2.3 percent on reports it plans to expand its smart factory construction project this year.
New Zealand's NZX-50 index dropped 18.51 points or 0.27 percent to 6,824.50 after a gauge of commodity prices fell in April and a government report showed the country's jobless rate increased more than expected in the first quarter of 2016.
Xero tumbled 3.5 percent to hit a one-month low and Air New Zealand slumped 5.4 percent to erase all of its gains posted in the previous session, while Sky Network Television rose 1.8 percent to reach a nine-month high.
India's Sensex was down 0.4 percent, extending losses for the third day amid weak global cues. Indonesia's Jakarta Composite index was moving down 0.2 percent, Singapore's Straits Times was losing 1.2 percent and the Taiwan Weighted tumbled 1.3 percent while Malaysia's KLSE Composite index was gaining 0.4 percent. Japanese markets remained closed for a holiday.
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