Asian markets reversed gains Thursday, hit by a sharp pullback in commodity prices that dragged down shares of resource issues such as BHP Billiton in Sydney, Zhongjin Gold Co. in Shanghai and Korea Zinc Co. in Seoul.
In highly volatile trading in China, the benchmark Shanghai Composite, which tracks both the Yuan-denominated A shares and foreign currency-denominated B shares, tumbled as much as 6.5% at one point during the session, before recovering. At the end of the session the index recovered from the earlier losses setting up a gain of 1.13% to 3,804.05, a surge of nearly 290 points from the day's low at 3,516.33, a level it hasn't seen since April.
The volatility in the Shanghai composite spread weakness in Hong Kong, where the Hang Seng China Enterprises index slumped 5.2% to 10,842.29. The benchmark Hang Seng Index lost 3.5% to 21,108.22.
Worries about continued monetary tightening by the Chinese central bank also weighed on market sentiment. The fear remained despite the People Bank of China's decision on Tuesday to raise banks' credit requirement by a half-point to a record 15.5% amid soaring consumer prices.
Australia's S&P;/ASX 200 sank 3.1% to 5,182.40.
Stock markets in Japan, India, Indonesia, Malaysia, Pakistan and Philippines were closed for a holiday Thursday.
Elsewhere in the region, Singapore's Straits Times Index dropped 0.6% to 2,816.07. The Taiwan's weighted index gain 1.93% to 8,337.62 on hopes of better ties with China after the country elects a new president Saturday, and South Korea's Kospi inched up 0.1% to 1,623.39, with both rebounding from early losses, and South Korea's Kospi expanded by 0.07% to 1,623.39.
April gold futures, which plunged $59, or 5.9%, to $945.30 an ounce on the Nymex overnight, fell as low as $915 in electronic trading. The contract was recently down $8.7 to $936.6 an ounce.
May crude-oil futures slipped 64 cents to $101.90 a barrel in electronic trading, after sinking $5.96 to $102.54 a barrel on the New York Mercantile Exchange. April futures, which expired Wednesday, dropped $4.94 to $104.48 a barrel.
The pullback overnight marked the worst one-day drop in nearly two years for gold and the biggest daily loss for crude oil since early 1991.
The U.S. currency, which shares an inverse relationship with commodities as their prices are quoted in dollar terms, continued to strengthen. The greenback recently bought 99.18 yen, compared with 99.09 yen late in New York and 98.61 yen in London Wednesday. The euro was trading at $1.5552.
European stocks dropped for a second day, with commodity producers continuing to feel the heat from the unwinding of metals and energy prices and with credit dropping 5.5% after warning of a first-quarter loss. The U.K. FTSE 100 fell 0.9% to 5,494.70, the German DAX 30 fell 0.6% to 6,320.36 and the French CAC 40 dropped 1.1% to 4,404.88.
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