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[HONG KONG] The slump in oil dominated the mood on Asian markets Wednesday after falling back below US$30 a barrel, hammering energy firms once again and sending stocks deeper into the red.
With the euphoria of Friday's Bank of Japan stimulus but a distant memory, Tokyo led the regional losses followed by Hong Kong, where insurance giant AIA lost almost a 10th of its value on fears China would tighten insurance rules.
The plunge in oil prices to 12-year lows has sent shudders through world markets, helping wipe trillions of dollars off valuations, even leading to the word "recession" raising its head.
Crude resumed its downward trend this week, jettisoning most of the gains seen in a four-day rally last week fuelled by hopes for OPEC-Russian talks on output cuts.
US benchmark West Texas Intermediate crashed more than 11 per cent on Monday and Tuesday to fall back through the US$30 level for the first time since January 21. Brent lost almost six percent in the same period.
And on Wednesday the losses piled up ahead of a US report that analysts warned could see a further increase in stockpiles. WTI lost one percent and Brent 0.9 per cent in early Asian trade.
Oil prices have crumbled about 75 per cent since mid-2014, hit by a perfect storm of weak demand, oversupply, overproduction, a slowing global economy and a strong dollar.
After already taking a hit on Tuesday, regional energy stocks were buffeted again on Wednesday.
In Hong Kong, CNOOC shed 5.7 per cent and PetroChina dived five per cent while Kunlun Energy sank 5.6 per cent.
Sydney-listed Santos lost 7.5 per cent and mining giant BHP Billiton lost 4.2 per cent while Woodside Petroleum fell 4.3 per cent.
Inpex gave up three percent in Tokyo, where JX Holdings was 2.8 per cent off.
The losses followed other big guns in New York and Europe. BP lost 8.7 per cent in London after it suffered a loss of US$6.48 billion last year and announced another 3,000 job cuts. Chief executive Bob Dudley warned: "We expect 2016 to be tough."
BP's American rival, ExxonMobil, managed to stay profitable, but reported a 58 percent drop in fourth-quarter earnings and announced plans to slash its capital budget and suspend its share repurchase programme.
"The underlying fundamentals are deteriorating and the talk of recession is getting louder," Chris Weston, chief market strategist at in Melbourne at IG Ltd., told Bloomberg News.
"When you see BP coming out with disastrous results and when you see Exxon cutting back on expenditures again, you realise the implication weak oil has on economies." Tokyo's Nikkei index sank 3.1 per cent by lunch, while Hong Kong was almost three percent off, Sydney lost 2.1 per cent and Seoul shed 1.1 percent. Shanghai slipped one percent.
There were also sharp losses across other parts of Asia, with Singapore, Manila and Kuala Lumpur worst hit.
In Hong Kong, insurance giant AIA lost 8.8 per cent in the morning following a Bloomberg News report that China would clamp down on the purchase of overseas cover. AIA's US shares lost more than five percent.
Beijing wants to close a loophole in its capital controls aimed at stemming the outflow of its depreciating yuan currency, as the economy logs its slowest growth in 25 years.
Manulife, another Hong Kong-listed insurer, shed 5.5 per cent.