Asian stocks drop as China raises bank reserves

By ALEX KENNEDY Associated Press Writer

SINGAPORE (AP) - Asian stocks fell Monday after China ordered banks to raise their reserves, the latest in a series of moves aimed at curbing inflation and surging property prices.

Hong Kong's Hang Seng index led decliners, falling 256.24 points, or 1.2 percent, to 20,855.21 while South Korea's benchmark dropped 1.2 percent to 1,721.21.

Singapore slid 1.0 percent, India fell 0.6 percent and Australia skidded 0.5 percent after the government said it would impose a new tax on the profits of mining companies. Malaysia's stock index was steady while Indonesia rose 0.2 percent.

Trading volume was light in Asia as the two biggest markets, Japan and China, were closed for holidays. Markets in Thailand and the Philippines were also closed.

The People's Bank of China said Monday that the deposit reserve requirement ratio for most banks will be raised half a percentage point, starting May 10. This is the third time this year that the central bank has raised the deposit reserve minimum.

Asian shares dropped despite European governments and the International Monetary Fund announcing Sunday they agreed on euro110 billion ($145 billion) in emergency loans for debt-ridden Greece on the condition Athens make painful budget cuts and tax increases.

After surging last year, Asian stock markets will likely trade sideways for the next few months as traders monitor whether economic growth in the U.S. and Europe continues as interest rates raise and government stimulus spending eases, said Timothy Wong, head of group research at DBS bank in Singapore.

"Investors are uncertain what the catalysts are going to be for the markets to more higher," Wong said. "For the markets to move higher, you would need much higher export growth, which would be a function of what's happening in the U.S. and Europe."

In currencies, the dollar rose to 93.99 yen from 93.91 yen while the euro fell to $1.3224 from $1.3338.

Benchmark crude for June delivery was down 4 cents to $86.11 a barrel after the contract rose 98 cents to settle at $86.15 on Friday.

In the U.S. on Friday, the Dow fell 158.71, or 1.4 percent, to 11,008.61. The Standard & Poor's 500 index declined 20.10, or 1.7 percent, to 1,186.68, while the Nasdaq composite index dropped 50.73, or 2.0 percent, to 2,461.19.