Asian Stocks Fall On Growth Concerns; Nikkei Slumps 1.98%

Asian stock markets ended lower Wednesday as sentiment was weighed down by concerns over the global economic growth and the U.S. corporate earnings.

Japanese benchmark Nikkei tumbled 1.98 percent or 173.36 points to 8,596.23, Hong Kong's Hang Seng declined 0.11 percent or 22.74 points to 20914.54 and South Korea’s KOSPI Composite plunged 1.56 percent or 30.82 points to 1,948.22 while Chinese Shanghai Composite gained 0.22 percent and Indian benchmark BSE Sensex slipped 0.70 percent.

Markets opened on a negative note, tracking the overnight losses on the Wall Street as sentiment was dampened following the pessimistic global growth forecast by the International Monetary Fund (IMF) while fears of a poor quarterly earnings season in the U.S. also weighed.

Concerns over the global economic slowdown resurfaced after the IMF slashed its growth forecast for the world to 3.3 percent this year and 3.6 percent for 2013 citing the debt crisis affecting the euro zone and the faltering U.S. economy. The IMF said a further spike in the euro zone crisis and failure to tackle the “fiscal cliff” in the U.S. would make growth prospects far worse.

The IMF also cut its growth forecasts for China to 7.8 percent for this year and 8.2 percent for next year, saying the stimulus efforts have so far failed to deliver the expected boost, increasing fears of a hard landing in the world’s second largest economy.

Meanwhile, concerns over the upcoming quarterly corporate earnings increased after Alcoa, the largest U.S. aluminum producer, kicked off the season reporting that it swung to third quarter net loss. Alcoa also lowered the global consumption forecast for 2012 to 6 percent down from 7 percent announced in July citing the main reason as the slowdown of China’s economy.

Market participants feared that the upcoming quarterly corporate earnings will be far less flattering than in previous quarters. According to Thomson Reuters’ data, S&P 500 earnings for the third quarter are forecast to have fallen 2.4 percent from the year-earlier period, which would be the first decline in three years and could make global recovery more difficult in the months ahead.

"It has been a good run and there are sellers looking to lock in 9 or 10 percent (profit), which will probably look pretty good over the course of the year. We're in a low-growth environment, so if you can get close to a double-digit return you might as well try to lock that in,” Winston Sammut, investment director at Maxim Asset Management in Sydney, told Reuters.

Japanese Nikkei plunged to two month low, led by declines from automakers and technology shares. Technology shares plunged after top chip maker Intel Corp was hit with brokerage downgrades. Panasonic Corp. plunged 3.63 percent and Fujitsu Ltd. fell 3.08 percent while Toshiba Corp. slumped 4.18 percent.

Automakers went down after they confirmed sharp declines in China sales as Japan's tensions over the territorial dispute with China sparked boycotts and raised concerns about their future in the world's biggest auto market. Honda Motor Co Ltd. declined 1.14 percent and Toyota Motor Corp. fell 1.90 percent.

Sands China Ltd. declined 0.92 percent and AIA Group Ltd. fell 1.34 percent in Hong Kong while Dongfeng Automobile Co Ltd. surged 3.96 percent in Shanghai.

In Seoul, Korea Electric Power Corp fell 2.78 percent and Samsung Electronics Co Ltd plunged 3.43 percent while LG Electronics Inc fell 0.44 percent.