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Asian markets fall on oil price, economic woes

/ Source: The Associated Press

Asian stock markets fell sharply Monday, tracking Wall Street's losses amid growing concern over record oil prices and sluggishness in the U.S. economy.

Japan's Nikkei 225 index dropped 308.06, or 2.1 percent, to 14,181.38. Markets in South Korea, Taiwan, Thailand and New Zealand were all down 1 percent or more.

Indian shares were hardest hit, with the benchmark Sensex falling as much as 4.4 percent before recovering some. By midday, it was down 3.6 percent at 15,023.21.

Investors were spooked after figures released Friday showed the U.S. jobless rate jumped from 5 percent to 5.5 percent in May, the biggest gain in more than 20 years — stoking fears about the health of the world's largest economy and a vital Asian export market.

Alarming oil prices
Oil prices were more alarming still. Crude oil surged late last week, with the July contract on the New York Mercantile Exchange jumping 8 percent Friday to $138.54 a barrel, a record close. In Asian trading Monday, oil was down 96 cents to $137.57.

"It's anybody's guess where the oil prices will go. Nobody can call the price," said Gul Tekchandani, a Mumbai-based investment adviser. "Clearly nobody will venture close to the market. The sentiment is negative."

In India, Reliance Industries Ltd. sank 3.23 percent. Banking stocks also dropped, with ICICI bank falling 3.33 percent.

Last week, India cut government subsidies on gasoline, cooking gas and diesel fuel, raising retail prices. The move triggered angry demonstrations in several parts of the country.

Gasoline prices were raised 5 rupees ($0.13) a liter. In New Delhi, that meant an 11 percent increase to 50 rupees ($1.20) a liter ($4.56 a gallon). Fuel prices vary between states, which also impose their own taxes.

In Tokyo trading, Nissan Motor Co. sank 3.4 percent and Sony Corp. dropped 3.7 percent.

Markets in Hong Kong, mainland China and Australia were closed for public holidays.