Asian markets tumble on weak US corporate earnings reports

BANGKOK (AP) – Mixed US corporate earnings sent Asian stocks lower yesterday as traders waited for the Federal Reserve’s updated outlook on the world’s biggest economy.

Japan’s Nikkei 225 index was down 1.1 percent to 9,568.27, with investors unloading blue chip shares ahead of what is expected to be a punishing earnings season. Nintendo Co. Ltd. announced Monday that its annual profit dropped for the second straight year as sales of its gaming devices fell.

Other major Japanese companies reporting this week include Canon Inc., Honda Motor Co., and Komatsu Ltd., the world’s second-largest construction machinery maker after Caterpillar Inc. Canon shares were down one percent. Honda dropped 1.6 percent and Komatsu fell 1.5 percent.

Toyota Motor Corp. slumped 2.4 percent, a day after announcing its car production in Japan plummeted a staggering 62.7 percent in March due to a parts supply crunch following the earthquake and tsunami on March 11.

Toyota, the world’s top-selling automaker last year, said Monday its domestic production in March was the lowest since 1976 when Toyota started keeping production figures.

The magnitude-9 earthquake and tsunami destroyed many factories in northeastern Japan, causing severe parts shortages for Toyota and other automakers.

Elsewhere, South Korea’s Kospi was down 0.6 percent to 2,204.51, and Hong Kong’s Hang Seng dropped 1.1 percent to 23,865.91. Mainland China’s Shanghai Composite Index lost 0.9 percent to 2,937.73. Benchmarks in Taiwan, Singapore, Indonesia and the Philippines were also down.

Traders are looking to the Federal Reserve’s two-day meeting that begins Tuesday, watching for any changes to the Fed’s outlook on the economy. They also expect to find out if the Fed’s $600 billion bond-buying effort will expire as scheduled in June.

Since late last year, the Fed has bought government bonds to keep interest rates low. Fed Chairman Ben Bernanke and his colleagues are expected to signal this week that they will allow the program to expire as scheduled.

“Bernanke is not going to tell us much new,” DBS Bank Ltd. in Singapore said in a research note. “On the growth front, he could soften his tone, but is still likely to reassure markets that the recovery is gaining hold.”

Separately, the Asian Development Bank says world food prices have surged by more than 30 percent in the first two months of 2011 — a serious setback for a region that has rebounded rapidly from the global economic crisis.