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Nikkei Markets

Asian stocks slump as US yields spark growth concerns

Thai shares fall in line with region as pro-junta party was set to win election

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan slumped on Monday as rising U.S. government bond prices renewed worries about global economic growth and investors digested some downbeat earnings reports.

The Nikkei Asia300 Index fell 1.9% to 1,307.86. Hong Kong's Hang Seng Index and China's Shanghai Composite Index each lost 2%, while Thailand's benchmark SET Index fell 1.2%.

Media reports from the southeast Asian country said the Palang Pracharat party, which is backed by Thailand's military, was ahead and poised to win in the elections held on Sunday - the country's first since a coup in 2014. Kasikornbank lost 1.3%, mobile service provider Advanced Info Service gave up 2.4% and Airports of Thailand shed 0.7%.

Economic data released last week showed a slowdown in U.S. factory activity and services data in February. Signs that the stimulus provided by tax cuts announced by the administration of President Donald Trump was wearing off and that the Sino-American trade war could weigh on global growth have been in focus in recent months. At the same time, Germany's manufacturing output contracted for a third straight month.

The yield on 10-year U.S. Treasurys fell to its lowest level since January 2018 on Friday, dropping below the yield on three-month notes. The inversion of the yield curve, a phenomenon where shorter-dated yields exceed longer-dated ones, is seen by some as indicative of a coming recession.

We "think that we will see a U.S. recession in 2020, a hangover that will follow the excesses of the fiscal package and the damage done by U.S. trade policy," Kit Juckes, a global strategist at Societe Generale, wrote in a report. "The U.S. curve isn't significantly inverted yet, but it is getting there."

Samsung Electronics lost 2.3% and Hyundai Motor gave up 2.8% in Seoul, consumer electronics and electronic products maker Hon Hai Precision slid 2.5% in Taipei and Tata Motors, owner of the Jaguar Land Rover luxury car brands, slid 2.3% in Mumbai.

In Hong Kong trading, internet services major Tencent Holdings dropped 3.1% and pan-Asia life insurer AIA Group retreated 2.2%.

Coal miner China Shenhua Energy tumbled 6.9% after reporting a 7.7% decrease in 2018 net profit.

Oil producer and refiner China Petroleum & Chemical, or Sinopec, gave up 3.4% despite reporting a 23.4% increase in full-year profit.

Sports-utility vehicle and pick-up maker Great Wall Motor shrank 2.8%. Trade tensions between the U.S. and China posed a major hurdle to the automaker's ambitions to enter the American automobile market, its Chairman Wei Jianjun told reporters in Hong Kong on Monday.

Sapura Energy ended little changed amid broad market weakness in Kuala Lumpur after the oil & gas services company on Monday said it swung to a net profit in the fourth quarter and the full financial year, helped by gains on the sale of its stake in a subsidiary.

-- V. Phani Kumar

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