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Wednesday, Jul 18, 2012 5:15 AM UTC

Asian stocks fall as Bernanke warns on economy

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Topics: From the Wires,

SEOUL, South Korea (AP) — Most Asian stock markets dropped Wednesday despite upbeat U.S. corporate earnings as the Federal Reserve chief warned another recession is possible without giving a hint at plans for stimulus.

Hong Kong’s Hang Seng was down 0.8 percent at 19,305.26 and South Korea’s Kospi dropped 0.7 percent to 1,810.05. Australia’s S&P/ASX 200 lost 0.5 percent to 4,156.30 while Japan’s Nikkei 225 added 0.4 percent to 8,789.88. China’s Shanghai Composite Index was little changed 2,161.77.

Investor sentiment was dampened as Federal Reserve Chairman Ben Bernanke gave a bleak assessment of the U.S. economy in his testimony to the Senate. Without a congressional agreement, tax increases and deep spending cuts would take effect in the U.S. at year’s end. Bernanke noted Tuesday what the Congressional Budget Office has warned: A recession would occur, and 1.25 million fewer jobs would be created in 2013.

The fed chief gave no signal on what steps that the Fed might take to support the economy and whether any action was imminent, disappointing investors who expected a more aggressive stance.

Intel’s gloomy assessment of the global economic outlook after U.S. markets closed also dented sentiment. The world’s largest chipmaker said its revenue for the current quarter is likely to come in below market forecasts.

Investors reduced their holdings of Asian tech exporters after Intel’s results, which reinforced worries that the economic uncertainty is hitting global sales of consumer electronics products. Samsung Electronics edged 0.3 percent lower and SK Hynix, the world’s second-largest maker of memory chips, tumbled more than 4 percent. LG Electronics and LG Display dipped nearly 2 percent.

Overnight gains in the U.S. markets failed to cheer investors in Asia. On Tuesday, stronger-than-expected earnings reports from big U.S. companies lifted Wall Street. Shares of the U.S. biggest toy maker Mattel and Coca-Cola climbed after reporting earnings that beat expectations.

The Dow Jones Industrial Average rose 0.6 percent and the Nasdaq gained 0.5 percent. The Standard & Poor’s 500 added 0.7 percent.

Investors are waiting for earnings releases and Bernanke’s return to Capitol Hill on Wednesday to testify to the House Financial Services Committee.

Benchmark crude for August delivery was down 45 cents at $88.87 in electronic trading on the New York Mercantile Exchange. The contract added 79 cents to end Tuesday at $89.22 per barrel in New York.

In currency markets, the dollar fell 0.1 percent to 79.02 yen and the euro was slightly lower at $1.229.

Youkyung Lee

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Gripping photos: The people of the Turkey protests (slideshow)

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  • The protests take on a festive element as police forces move out of the park and square. Wearing a gas mask, this young man dances to traditional Turkish music in front of Taksim Square’s Ataturk Monument.

  • In Gezi Park since March 31st, this protester, originally caught off-guard by the Government’s teargas and water cannons, went out and bought a Russian army mask from WWII, preparing for what was to come.

  • This rambunctious boy seems to be enjoying the chaos. After taking this picture he threw a stone at the already destroyed building in the background.

  • Forming a line, the police face off directly with protesters in Taksim Square. After a while, they retreated and there was a general cheer – a back-and-forth dance that has been common since the beginning of this protest.

  • An elderly woman in Gezi Park reads the news. The tent community occupying the park was violently destroyed on June 16th.

  • Many different groups had set up booths to promote their cause in Taksim Square and Gezi Park. Standing in front of one, this man waves his flag while posing with conviction.

  • Many home-remedies are used to minimize the effects of tear gas. This woman has put a milky solution on her face, removing her mask after the tear gas dissipated. Before sunrise, the police came again for another round of teargasing.

  • People capitalize on the uprising -- selling flags, beer, gas masks, sky lanterns and spray paint to name just a few of the popular items.

  • On Monday morning, June 11, the police execute a strong offensive. Many plain-clothed police officers, like the ones seen here, clash with protesters in the side streets away from the main stand-off in Taksim.

  • The authorities seem to be most aggressive in the night, pushing protesters away from the square and park. After being teargassed this young woman catches her breath with other protesters on Siraselviler Street.

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