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Rising Oil Prices Spoil Investor Sentiment in Asia - 2004-05-14

Rising oil prices and interest rates spoiled investor sentiment in Asia this week. All major stock indices fell sharply from their levels a week ago.

The mood in Asia's major stock markets has been gloomy for most of the week. Transport stocks lost ground as fuel prices surged, and several airlines, including Malaysian Airlines and Air New Zealand, introduced fuel surcharges on airfares to cover their costs.

Craig Chan, an economist at Forecast International in Singapore, says high oil prices threaten corporate profits and regional growth.

"If we see income losses from high oil prices, that's definitely going to have an impact on the growth outlook and that would impact on corporate profits and naturally would filter through the equity markets as well," he said.

Hong Kong's Hang Seng index lost five percent this trading week, falling to 11,276 on Friday. Analysts say investors are still worried that China will not be able to slow down its economy.

Tokyo's Nikkei 225 was up slightly Friday at 10,849. But the Nikkei has dropped five percent from a week ago.

South Korea's Kospi had a short-lived rally Friday after the country's top court reinstated impeached President Roh Moo-hyun. But selling in blue chips pushed the index down nearly three percent. It closed at 768 points, eight percent lower than last week's close.