Chinese stocks down sharply; Nikkei falls as euro hits 2-month low against yen
The collapse in Germany of talks to form a new coalition government sent the euro sliding in early Asian trading Monday, weighing on stocks there, while Chinese stocks slid on fresh concerns about the impact of new regulations.
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Chinese stocks fell more than 1% shortly after trading began as the government draws up plans to streamline oversight of asset-management products sold by financial institutions. The move is aimed at reining in risk and putting an end to practices that take advantage of regulatory loopholes.
The Shanghai Composite finished morning trading down 0.8%, but indexes in Shenzhen, where more small-cap stocks trade, rebounded more sharply. After sliding 2.8% Friday on regulatory concerns, the Shenzhen Composite dropped as much as 2.1% more Monday morning before a sharp rebound cut the drop to 0.5% at the lunch break.
The weakness weighed on Hong Kong's benchmark, with the Hang Seng down 0.2% as major Chinese banks fell nearly 1%.
Meanwhile, the euro's slide helped push up the yen, a haven, and as a result pressured Japanese stocks after they logged last week their first weekly decline since early September.
The Nikkei fell 0.6% as the euro hit two-month lows against the yen after negotiations to form the first German government made up of center-right parties and left-leaning environmentalists collapsed.
Read:Merkel's future in doubt as German coalition negotiations break down (http://www.marketwatch.com/story/merkels-future-in-doubt-as-german-coalition-negotiations-break-down-2017-11-19)
"Political uncertainty is growing," said Akira Moroga, a market-product executive at Aozora Bank. But he added that it isn't likely the euro would continue to weaken given the European Central Bank's moves toward tightening monetary policy.
The yen has risen slightly to Yen112 per dollar, adding to gains seen after Tokyo stock trading ended Friday.
Most other indexes were little changed in Asia on Monday after strong end-of-week rebounds. Benchmarks in Australia , Korea and Taiwan were down slightly, while New Zealand and India had modest early gains.
Elsewhere, oil prices consolidated around Friday's settlement after an end-of-week rebound. Saudi Arabia dispelled concerns that Russia wouldn't join an agreement to extend production cuts.
Brent futures lagged behind to start Asian trading Monday on what Daniel Hynes, a commodity analyst at ANZ Bank, called a little profit-taking. January futures were recently down 0.2% at $62.60 a barrel as the U.S. benchmark rose slightly.
(END) Dow Jones Newswires
November 19, 2017 23:35 ET (04:35 GMT)