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Nikkei Markets

Asian stocks fall as crude prices surge after Saudi oil field attack

Disappointing China data further damp investor sentiment

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell alongside U.S. equity index futures after an attack on a major Saudi Arabian oil field pushed up energy prices.

The Nikkei Asia300 Index of companies outside Japan fell 0.5% to 1,283.26.

Futures on the S & P 500 Index were down 0.5% on Monday after the attack on the Saudi Arabian oil field and refinery over the weekend prompted fears of a confrontation between Tehran and U.S. and its allies. While Iran-backed Yemen's Houthi rebels claimed responsibility for the drone strike, U.S. Secretary of State Mike Pompeo on Twitter blamed Tehran and said that Washington would hold the nation accountable. Meanwhile, President Donald Trump remarked that there was "reason to believe that we know the culprit" and that U.S. was "locked and loaded depending on verification."

"This weekend's drone attacks on Saudi oil facilities mark a major setback to the global geopolitical landscape. Just as conditions were falling in place for U.S.-Iran talks, the weekend's events push risks in the opposite direction," DBS Bank said in a note "Other than helping some oil exporting companies, the overall impact of heightened risk is negative for global equities in the near-term."

Equities of countries sensitive to oil prices declined Monday. The Jakarta Stock Exchange Composite Index tumbled 1.8%, while India's BSE Sensex lost 0.7%.

Risk appetite across the region was further marred by disappointing data from China. The Asian nation's industrial output rose 4.4% last month and retail sales increased 7.5%. Analysts polled by Reuters had expected the factory output to increase by 5.2% and retail sales by 7.9%.

An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, slipped 0.6%. China Life Insurance fell 1.7% and Tencent Holdings lost 0.9%.

China Mengniu Dairy fell 2.3% after announcing an agreement to buy infant formula maker Bellamy's Australia for 1.46 billion Australian dollars ($1 billion). The purchase price of A$12.65 per share represented an over 50% premium to Friday's close price of shares of Bellamy.

Chinese pork producer WH Group rose 0.5% after China said on Friday it would cancel additional tariffs on imports of pork and soybeans from the U.S. WH Group, which has significant business interests in the U.S., has been caught in the crosshairs of the Sino-American trade war that began early last year.

The attack on Saudi Arabian facilities prompted a surge in Brent crude price to more than $70 a barrel, boosting energy producers. PetroChina jumped 4.3%, CNOOC added 7.4%, Thailand's PTT Exploration and Production advanced 2%, and South Korea's SK Innovation climbed 2.7%.

Indian Oil Corp, down 1.2%, led the country's fuel retailers lower amid the surge in oil.

Hong Kong Exchanges & Clearing declined 2.4% after London Stock Exchange Group on Friday rejected its 29.6-billion-pound ($36.7 billion) acquisition bid. HKEX said it plans to continue engaging with LSEG shareholders.

--Nimesh Vora

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