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Asia stocks fall as China easing hopes dim

Pamela Sampson, AP Business Writer

BANGKOK (AP) -- Asian stock markets were mostly lower Monday as hopes dimmed for aggressive moves by China to stimulate its slowing economy.

China's consumer price index for September rose 1.9 percent from a year earlier, easing from August's 2 percent rise, but analysts said closer examination of the figures suggest China's government and central bank will be cautious about doing more to boost growth in the world's No. 2 economy.

Dariusz Kowalczyk at Credit Agricole CIB in Hong Kong said non-food inflation accelerated to a seven-month high of 1.7 percent, an indication of underlying price pressure that "reduces the odds of further monetary easing."

He said an interest rate cut by the central bank is unlikely although a reduction in the reserve ratio requirement — the ratio of cash that banks must keep on hand — might be possible later this year.

Kowalczyk said the producer prices index, which measures inflation at the wholesale level and fell 3.6 percent from the year before, was another negative signal since it is indicative of a weak level of economic activity.

"A combination of growth softness and less room to ease policy stance is a negative and should weigh on sentiment today," he said.

Japan's Nikkei 225 index vacillated between positive and negative territory until moving 0.5 percent higher at 8,579.34.

Hong Kong's Hang Seng lost 0.1 percent to 21,110.10. South Korea's Kospi fell 0.6 percent to 1,921.74. Australia's S&P/ASX 200 dropped 0.1 percent to 4,482.50. Mainland China's Shanghai Composite Index lost 0.5 percent to 2,094.47 and the smaller Shenzhen Composite Index lost 1 percent at 857.16.

Concerns about global economic growth — especially the direction of China's economy — hurt Australian mining shares since Australia is a major exporter of iron ore and other minerals to China. Rio Tinto Ltd. lost 1.1 percent, Newcrest Mining fell 2.2 percent and Fortescue Metals Group tumbled 3.5 percent.

Falling gold prices hurt shares of related companies. Hong Kong-listed Zijin Mining Co., China's largest gold miner, fell 2.5 percent.

Japanese mobile phone company Softbank fell 5 percent after news reports said it had agreed to buy 70 percent of Sprint Nextel Corp. for $20 billion.

Still, investors found deals among Japanese blue chips. Honda Motor Corp. jumped 4.2 percent. Toyota Motor Corp. gained 2.1 percent. Toshiba Corp. rose 2.7 percent.

"Decent exporters are being bought and I think that makes sense," said Benjamin Collett, head of Japanese equities at Louis Capital Markets in Hong Kong.

Benchmark oil for November delivery was down 69 cents to $91.17 per barrel in electronic trading on the New York Mercantile Exchange.

In currency trading, the euro fell to $1.2905 from $1.2958 late Friday in New York. The dollar rose to 78.54 yen from 78.38 yen.