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Nikkei Markets

Asian equities fall as Middle East tensions escalate

South Korean chipmakers gain following Samsung Electronics' earnings

HONG KONG (Nikkei Markets) -- Asian shares outside Japan declined Wednesday as geopolitical risks returned to the fore following a retaliatory attack by Iran on U.S. military bases in Iraq.

The Nikkei Asia300 index lost 0.6% to close at 1,379.67.

Asian stocks and U.S. equity index futures fell after Iran launched ballistic missiles against at least two Iraqi military bases that housed U.S. military forces. Iran's Islamic Revolutionary Guard Corps reportedly said that the attacks were in response to the last week's U.S. strike that killed a top Iranian military commander and warned of more attacks if the U.S. retaliates.

U.S. President Donald Trump said on Twitter that "all is well" and that casualties from the attack were being assessed.

Jeffrey Halley, a senior market analyst at OANDA, said "a U.S. response of some kind is the most obvious" and damage and casualties from the Iranian attack will determine the likely scale of the U.S. response.

Safe-havens gold and U.S. bonds received a boost from the latest Iran-U.S. confrontation. Gold reached new seven year highs and 10-year Treasury yield fell below 1.80%. Asian currencies were mostly lower, led by the oil-sensitive Philippine peso.

Among losers on the A300 gauge on Wednesday, Universal Robina, one of the largest food and beverage companies in the Philippines, dropped 3.3%.

China Life Insurance, down 2.5%, led mainland insurers lower while Industrial and Commercial Bank of China paced losses among lenders, slipping 1.2%.

Chinese electric-vehicle maker BYD shed 1.2% after reporting a 38% drop in December sales.

Singapore Airlines edged 0.2% lower. The company said Wednesday that it is diverting all its flights in and out of Europe from Iranian airspace in view of the latest developments in the region.

South Korean chipmakers advanced following earnings from heavyweight Samsung Electronics, helping limit losses on the A300 gauge. Samsung Electronics closed 1.8% higher after saying that operating income in the December quarter declined 34% from a year ago to 7.1 trillion won ($6.1 billion). Analysts polled by Bloomberg had pegged operating income for the quarter at 6.49 trillion won.

Samsung's peer SK Hynix jumped 3.6%.

--Nimesh Vora

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