Hong Kong: Asian markets fell sharply today, while oil prices rose and emerging market currencies sank, as the West stepped up preparations for a possible military strike on Syria.
The losses extended falls on Tuesday and followed drops on Wall Street and in Europe as investors ran for cover, while stocks and currencies in developing Asian countries came under renewed pressure.
Adding to the tensions in the Middle East are concerns about a looming row in Washington over the US debt ceiling, which could leave the country in political deadlock.
Tokyo tumbled 1.51 percent, or 203.91 points, to 13,338.46 and Sydney shed 1.05 percent, or 54.0 points, to close at 5,087.2.
Seoul clawed back some early losses to end flat, edging down 1.32 points to 1,884.52. Shanghai was off 0.11 percent, or 2.27 points, at 2,101.30 while Hong Kong ended at a five- week low, slipping 1.60 percent, or 350.12 points, to 21,524.65.
Emerging markets in Asia -- already seeing selling because of the expected wind-down of the US Federal Reserve's massive stimulus programme -- were mostly lower.
Jakarta closed 1.48 percent higher, but Kuala Lumpur was off 0.89 percent and Bangkok lost 1.41 percent.
Manila ended down 3.02 percent, or 178.93 points, at 5,738.06 as traders grew jittery before the release of economic growth data on Thursday. However, it managed to pare earlier losses that saw it down almost six percent.
The West, led by the US, is edging closer to a targeted strike on Syria, which is accused of carrying out a gas attack on August 21 that killed hundreds of civilians.
"We are prepared. We have moved assets in place to be able to fulfil and comply with whatever option the president wishes to take," US Defense Secretary Chuck Hagel told the BBC on Tuesday.
The possibility of more turmoil in the oil-rich region saw crude prices extend gains.
New York's main contract, West Texas Intermediate for delivery in October, hit an intra-day high in Asia of USD 112.23. Brent North Sea crude for October spiked at USD 117.22.
Kathy Lien, of BK Asset Management, said: "The possibility of a military strike on the country (Syria) is growing by the minute and investors are worried that it could destabilise the region."
On Wall Street, the Dow fell 1.14 percent, the S&P 500 lost 1.59 percent and the Nasdaq tumbled 2.16 percent, while Paris and Frankfurt each lost more than two percent.
In forex trade, the dollar sat at 97.38 yen, up from 97.01 yen late in New York but well down from levels above 98.00 yen in Tokyo on Tuesday.
The euro bought USD 1.3348 and 129.92 yen compared with USD 1.3391 and 129.88 yen.
India's rupee continued to suffer, slumping almost four percent to 68.74 against the dollar -- another record low -- as fears over Syria compounded domestic economic woes and expectations the US will wind down its stimulus programme.
The Indonesian rupiah dived to 11,418 against the dollar from 10,925 rupiah, while the greenback was at 44.79 Philippine pesos from 44.43 pesos.
"The situation with Syria has been playing havoc with currency markets for the last few days," said Kenichi Hirano, market adviser at Tachibana Securities.
"Any action by the US is not likely to be protracted. But wrangling over the national debt could go on for quite a while, as we've seen in the past."
Dealers are increasingly concerned about a repeat of the 2011 debt ceiling stand-off that brought Washington close to defaulting on its repayments and preceded a downgrade of its AAA sovereign rating.
Treasury Secretary Jacob Lew said this week the USD 16.7 trillion limit will be reached in mid-October, raising the chances that Republicans and Democrats will engage in another game of brinkmanship.
Gold cost USD 1,422.90 an ounce, near a three-month high, at 1100 GMT on Wednesday, up from USD 1,410.75 late Tuesday.
In other markets -- India's benchmark 30-share Sensex index rose 0.16 percent, or 28.07 points, to 17,996.15 points after earlier diving more than three percent on concerns over the impact of a vast new food programme for the poor.
Singapore closed down 0.98 percent, or 29.84 points, at 3,004.18. Real estate developer Capitaland eased 2.33 percent to Sg dollar 2.93 while oil rig maker Keppel Corp shed 0.58 percent at Sg dollar 10.23.
Taipei ended flat, edging up 3.70 points to 7,824.54.
Taiwan Semiconductor Manufacturing Co added 1.26 percent to Tw dollar 96.8 while Hon Hai Precision was 0.87 percent lower at Tw dollar 79.3.
Wellington gave up 0.71 percent, or 32.31 points, to 4,509.72.
Air New Zealand shed 1.44 percent to NZ dollar 1.37, while SkyCity was off 0.76 percent at NZ dollar 3.93 and Telecom slipped 1.79 percent to NZ dollar 2.20.
First Published: Wednesday, August 28, 2013, 21:43