* Japan's Nikkei plunges more than 9 pct
* Oil drops to 13-month low near $73 a barrel
* Hedge fund Citadel suffers in September
(Updates prices, adds other markets)
By Kevin Plumberg
HONG KONG, Oct 16 (Reuters) - Japan's Nikkei share average
tumbled almost 10 percent and oil prices dropped to a one-year
low on Thursday after downbeat U.S. economic data spread fears
of a more protracted and sharp global slowdown than initially
expected.
Optimism about the stabilisation in money markets has been
swept aside and widespread selling of global equities has
resumed in earnest as the quarterly results season gets
underway and reports filter in about sharp losses at hedge
funds.
Relative to current earnings expectations, Asian stocks are
oversold. However, upcoming corporate outlooks could influence
whether estimates get cut, potentially adding another weight on
equities and economic prospects. Financial market volatility as
investors greatly reduce their exposure to risk has weighed on
the global economic outlook, which has fed back into markets in
a damaging circle.
"I think today there is just a combination of uncertainty
and deleveraging in the market," said Amar Gill, head of
thematic research at CLSA in Singapore.
"International funds are pulling back and putting their
money into whatever is safest, Treasuries or cash or paying off
existing debt," he said.
Japan's Nikkei dropped 9.55 percent <>, weighed down
the most by stocks of companies most exposed to global demand
such as Canon Inc <7751.T> and Honda Motor Co <7267.T>.
The president of Toyota Motor Corp <7203.T> on Wednesday
said the business environment has deteriorated beyond earlier
expectations and predicted the key North American car market
would remain sluggish through next year.
The MSCI index of Asia-Pacific shares outside of Japan
<.MIAPJ0000PUS> fell 6 percent, locked in a downtrend that had
brought it to a near 4-year low last week. The index is down by
half so far this year.
Hong Kong's Hang Seng index <> was down 6.1 percent,
with the biggest losses racked up by commodity-related
companies, such as Shenhua <1088.HK>, China's top coal
producer.
Overnight U.S. stock markets slid across the board, with
the S&P 500 index <.SPX> dropping 9 percent after a report
showed U.S. retail sales dropped the most in more than three
years.
"Bottom line, there is little positive to say about this
market. The equity markets are impacted by the lack of
liquidity in financial assets, terribly oversold conditions as
well as unknown visibility on the macro economy," said Thomas
Lee, chief U.S. equity strategist with JPMorgan, in a note.
Despite mixed messages from the Federal Reserve on the
near-term outlook for interest rates, the futures market
reflects a 50/50 chance the benchmark U.S. interest rate could
drop to 1 percent this month from 1.50 percent.
Even the most deft investors have been flipped by the
ferocity of selling and risk reduction in markets. Citadel
Investment Group, one of the world's largest hedge funds, said
September was the single worst month in the history of the
company and warned of more volatility in weeks to come.
[]
The yen pared some its overnight gains against the dollar
and euro.
The U.S. dollar rose 0.5 percent from late U.S. trade to
100.25 yen <JPY=>. The euro gained 0.6 percent to 135.25 yen
<EURJPY=R> and edged up 0.2 percent against the dollar to
$1.3494 <EUR=>.
Anticipation of much slower growth and thereby reduced
demand knocked raw materials prices, including metals.
The benchmark Shanghai copper <SCFc3> and Shanghai zinc
<SZNc3> fell by their 4 percent daily limit at the opening,
while aluminium <SAFc3> touched its downside limit before
recovering. London copper futures fell 5.2 percent early,
extending a 7 percent overnight loss. []
The November U.S. light crude future <CLc1> fell for a
third day to a new 13-month low near $73 a barrel on Thursday,
down 1.9 percent, amid continued worries that a deepening
economic slowdown will cut into already weakening demand.
(For more on the crisis, click [])
(Editing by Lincoln Feast)
