Asian stocks hit by CIT bankruptcy

Tokyo lost 2.31 percent, Sydney 2.21 percent and Seoul 1.37 percent as dealers went into selloff mode. Hong Kong lost 0.61 percent, after having been almost three percent lower at one point.

Stocks had bounced on Friday after the U.S. announced it had moved out of its worst recession in decades.

But sentiment in New York was soon crushed, sending the Dow 2.51 percent down before the weekend.

And on Sunday CIT Group, one of the largest small-business lenders in the United States, filed for Chapter 11 bankruptcy — the fifth biggest in U.S. history.

However, Chinese investors were upbeat after two indexes pointed to rising manufacturing activity in the Asian giant. Shanghai added 2.70 percent.

On the new Nasdaq-style ChiNext board, which debuted with a wild opening on Friday, 20 of the 28 firms ended limit-down 10 percent due to profit-taking after enormous gains on the first day.

Manila and Mumbai were closed for public holidays.

TOKYO: Down 2.31 percent. The Nikkei-225 dropped 231.71 points 9,802.95.

Eiji Kinouchi, chief technical analyst at Daiwa Securities, told Dow Jones Newswires that signs indicating a recovery in the U.S. economy will have a big impact on stocks in the wake of CIT's bankruptcy filing. Exporters weighed on the Tokyo market although shares of Japanese consumer lenders surged.

HONG KONG: Down 0.61 percent. The Hang Seng Index fell 132.68 points to 21,620.19. Gains in China offset earlier losses in Hong Kong, which is tipped to correct further in the near term as it has risen 18 percent since the start of July.

SYDNEY: Down 2.21 percent. The S&P/ASX 200 dropped 102.8 points at 4,540.4.

SHANGHAI: Up 2.70 percent. The Shanghai Composite Index, which covers both A and B shares, was up 80.80 points to 3,076.65. "Fundamentals for the main board remain healthy as the local economy continues to recover," Jacky Zhang, an analyst at CSC International said.

SEOUL: Down 1.37 percent. The KOSPI ended down 21.60 points at 1,559.09. Financials were hit by the CIT failure.

SINGAPORE: Down 0.22 percent. The Straits Times Index eased 5.70 points to 2,645.43. "Ending the recession is only half of the battle," Bank of America Merrill Lynch said in a report referring to the U.S. GDP figures last week.

BANGKOK: Down 1.17 percent. The Stock Exchange of Thailand lost 8.02 points to close at 677.22.

KUALA LUMPUR: Down 0.12 percent. The Kuala Lumpur Composite Index lost 1.47 points to 1,241.76.

JAKARTA: Up 0.17 percent. The Jakarta Composite Index gained 3.94 points to 2,371.64.

WELLINGTON: Down 1.3 percent. The NZX-50 was down 41.57 points at 3,174.05.

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