Chinese shares fell Thursday after the rise in oil prices prompted worries about lower earnings for refiners and airlines. The benchmark Shanghai Composite Index fell 1.7 percent to 3,485.6. The Shenzhen Composite Index for China's smaller second market fell 1.5 percent to 1,063.9. Even institutional investors have “become short-term-minded” following China's May 12 earthquake, quickly buying and selling, said Huatai Securities analyst Chen Huiqin. “Investors are expecting the economy to benefit from the post-earthquake reconstruction work in June or July, but until then, trading is likely to remain choppy, especially under the shadow of surging oil prices,” she said. Light, sweet crude for July delivery rose to a record above US$135 a barrel Thursday in electronic trade on the New York Mercantile Exchange. Chinese refiners fell on the expectation that their costs for imported crude would rise. The sector was also weighed down by the government's public dismissal of rumors that it might end controls that bar refiners from passing on rising crude costs to consumers. China's biggest oil company, PetroChina Ltd., fell 2.2 percent. Its No. 2 competitor, China Petroleum & Chemical Corp., or Sinopec, shed 0.9 percent. Their shares had risen earlier this week on rumors that price controls might end. Air China and China Southern Airlines both fell 4.4 percent on a similar concern that the higher oil prices would hurt their earnings. China's currency, the yuan, hit a record against the US dollar for a fourth straight day, rising to 6.943 to the dollar. Japanese shares rose Thursday but buying sentiment was modest amid fresh worries over inflation as skyrocketing oil prices hit a record above US$135 a barrel. The benchmark Nikkei 225 index climbed 52.16 points, or 0.37 percent, to 13,978.46.“The market was supported by gains in banking and oil-related stocks in the afternoon session,” said Kazuhiro Takahashi, general manager at Daiwa SecuritiesSMBC Co. Ltd. “But overall sentiment was weak due to concern over inflation” as oil prices hit a record above US$135 a barrel on Wednesday. “Investors were trading with caution to see whether oil prices will peak out soon,” he said. Apart from the oil factor, an overnight fall on Wall Street also dampened sentiment, he said. Nippon Oil Corp., Japan's largest oil refiner, rose 5.3 percent to 833 yen. Nippon Mining Holdings Inc., Japan's top copper producer, grew 4.2 percent to 720 yen. Japan's financial giant, Mizuho Financial Group., rose 2.9 percent to 529,000 yen, while Mitsubishi UFJ Financial Group Inc. gained 0.9 percent to 1,017 yen. Troubled Sanyo Electric Co. lost 4.9 percent to 273 yen despite earnings results showing profit in the fiscal year through March for the first time in four years. The company announced the results before the market close. The Topix index of all the Tokyo Stock Exchange First Section added 9.58 points, or 0.7 percent, to 1,379.67. In currencies, the dollar was quoted at 103.06 yen mid-afternoon in Tokyo, up from 102.97 yen in New York late Wednesday. The euro stood at US$1.5772, compared with US$1.5780 in New York.
