(Updates with Japan earthquake)
* Clashes in Saudi Arabia also spur move to "safer" assets
* China inflation data suggest more policy tightening ahead
* Copper poised for heavy weekly losses on economic worries
* Japan stocks hit by quake at end of trading
* Nikkei closes at intraday and 5-week low; futures slump
By Saikat Chatterjee
HONG KONG, March 11 (Reuters) - Asian shares dropped after a
massive earthquake hit Japan, including the capital Tokyo,
darkening an already bleak mood caused by weak economic data and
unrest in Saudi Arabia.
The quake struck just before the close of Tokyo stock
trading. Japan's Nikkei average closed at an intraday
and five-week low, down 1.7 percent on the day.
The Hong Kong's Hang Seng share index was down 1.8
percent, and Nikkei futures in Singapore tumbled more than 3
percent. At 0650 GMT, Nikkei June futures were down 2.8 percent
at 10,075 .
The magnitude 8.9 quake shook buildings in Tokyo, causing
"many injuries" and triggered a four-metre (13-ft) tsunami, NHK
television and witnesses reported.
The yen extended losses against the dollar after the quake,
falling to 83.29 yen to the dollar compared with 82.80
before it struck.
Brent crude held near $115 per barrel as investors
monitored developments in the Middle East. Forces loyal to
Libyan leader Muammar Gaddafi battled rebels at an oil port,
while Saudi police fired in the air to disperse protesting
Shi'ites.
Oil prices are up by a quarter this year, with most of the
gains coming since the Libyan crisis erupted.
While oil prices around this level posed no substantial
threats to the world economy or financial markets, the risk that
prices may rise to damaging levels has risen substantially,
Barclays Capital strategists said.
Chinese inflation in February remained close to 5 percent,
suggesting tighter monetary policy may be needed, adding to the
uncertainty.
Key stock indexes in Australia and South Korea
closed down more than 1 percent each. The broader Asian
market outside Japan was down 1.4 percent, extending its drop by
more than 3 percent for the week as fresh outbreaks of violence
in the Middle East kept markets on edge.
Weak U.S. economic data spurred some profit taking in shares
in developed markets which have enjoyed a handsome run this
year, though some bargain buying checked losses.
.
RISK REDUCTION
Overnight, a weak Wall Street which ended down nearly 2
percent. The S&P 500 is up by a third since last July.
"It is another day of reducing risk across the portfolio. We
have had it one way for too long and with big issues hitting,
everyone is running to the exit at the same time," Chris Weston,
an institutional dealer at IG Markets said.
In credit markets, sovereign credit default swap spreads
pushed wider, reflecting the general risk aversion sentiment.
Shanghai copper rebounded but was on track to post
its biggest weekly loss since May 2010 while London futures
were looking at their worst week since last June,
dragged by worries of high oil prices hurting the global
economy.
The yield on benchmark 10-year notes slipped to
3.36 percent, down from 3.56 percent hit earlier this month.
In currency markets, the euro stayed weak after
having suffered its biggest one-day fall against the dollar in a
month, and further losses may loom if a euro zone summit fails
to soothe market nerves on sovereign debt.
Any disappointment could heap more pressure on the single
currency, which slid to one-week lows near $1.3770 overnight. It
last traded at $1.3810 .
(Additional reporting by Narayanan Somasundaram in Sydney and
Jonathan Rogers at IFR; Editing by Daniel Magnowski)
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