HANOI (Reuters): Asian markets traded mostly weaker on Thursday, as an oil-driven bout of risk aversion cut short a two-day rebound, though some bourses trimmed losses as investors assessed policy signals and the fallout from Middle East tensions.
Regional currencies remained under pressure against the dollar as higher oil prices stoked inflation concerns and lifted demand for safe-haven assets.
The Philippine peso led declines, down 0.5%, while the Malaysian ringgit slipped 0.4%, but remained the region's best performer so far this year.
The Indian rupee weakened 0.3% and hovered near record lows, with suspected central bank intervention helping limit further losses afterthe currency hit a fresh low earlier in the session.
The Indonesian rupiah fell 0.2%, the South Korean won lost 0.3%, the Singapore dollar eased 0.1%, the Taiwan dollar weakened 0.4%, while the Thai baht firmed 0.1%.
Oil prices jumped 9% to above $100 a barrel once again after reports of further attacks on vessels in Gulf waters.
The spike heightened fears that rising energy costs could fuel inflation and keep major central banks cautious on rates, even as the International Energy Agency prepared a record 400 million-barrel reserve release to calm markets.
The immediate concern is when the Strait of Hormuz - a conduit for 20% of global fuel supply - will be safe for traffic again.
Regional jitters further intensified after ASEAN foreign ministers called a special meeting on the Middle East crisis.
Some markets recovered their earlier losses. South Korea's tech-heavy benchmark KOSPI trimmed its decline to 0.5% after President Lee Jae Myung called for an extra budget to be prepared as soon as possible.
Taiwan stocks remained the region's laggard, down 1.6%. Low Pei Han, Head of Equity Strategy at Bank of Singapore, said the bank remains constructive on Asia ex-Japan equities over the longer term due to structural growth drivers, even after turning neutral on the region because of heightened Middle East tensions.
She said the biggest market risk from any disruption in the Strait of Hormuz would be higher energy and shipping costs, which could favour energy and materials sectors while pressuring industries vulnerable to rising input costs.
Elsewhere, Jakarta stocks extended gains to rise 0.4% after parliament approved five senior appointments to Indonesia's financial regulator. Thailand's benchmark also reversed early losses to gain 0.3%, while Singapore, the Philippines, Malaysia, India and Shanghai slipped between 0.1% and 0.7%. -- Reuters
