(MENAFN- AFP) A bigger-than-expected plunge in profits at China's industrial giants and a probe into brokerages sent shares in Shanghai tumbling Thursday, while more weak Japanese data dealt another blow to Tokyo's economic growth plan.
The selling on China's trading floors was exacerbated by next week's expected restart of initial public offerings, which dealers fear will divert cash from established listings and soak up market liquidity.
Beijing said industrial profits fell 4.6 percent in October year-on-year, much bigger than the 0.1 percent fall in September, and reinforcing worries about the world's number two economy, which is a key driver of global expansion.
The figures are the latest to come out of China showing a broad slowdown in growth and are in spite of a series of measures to shore up the economy.
Chinese traders were also spooked by news that authorities are investigating brokerages for alleged rules violations.
Citic Securities, the nation's largest brokerage firm, said Thursday it was being probed, while other firms were also being looked into. Citic fell 6 percent in Hong Kong trade and another brokerage, Guosen, lost 6.5 percent in Shenzhen.
Haitong Securities suspended trading in its shares in Hong Kong and Shanghai Friday.
The investigation comes as the government targets the financial sector following the spectacular summer markets meltdown that saw trillions of dollars wiped off valuations.
Shanghai's stock market slipped 1 percent, while Hong Kong suffered similar losses. Sydney, where several firms with business links to China are listed, was flat, as was Seoul. Most other regional bourses retreated, including Singapore and Taiwan.
Japan's Nikkei ended the morning session in the red after the government said prices fell last month, while consumer spending also dropped, overshadowing news that unemployment was at a decade low.
Prime Minister Shinzo Abe will come under fresh pressure from the results as his programme of big spending and massive monetary easing -- aimed at kick-starting growth and ending deflation -- struggles to kick in.
The economy slipped into recession in July-September -- the second time since Abe took office in December 2012 -- and there is growing speculation the Bank of Japan will ramp up its bond-buying, which effectively prints cash in a bid to boost lending.
Daiwa Institute of Research economist Satoshi Osanai said Japan's economy was "out of gear", with most of Abenomics' benefits limited to the country's boardrooms.
"That's why consumption is still weak, even though employment got better," Osanai said. "(Any) economic improvement remains at the corporate level and has not spread to other areas, such as the household sector."
The yen eased against the dollar with expectations of more cash hitting the markets.
US markets were closed Thursday for the Thanksgiving holiday.
- Key figures around 0300 GMT -
Tokyo - Nikkei 225: DOWN 0.3 percent at 19,894.88 (break)
Hong Kong - Hang Seng: DOWN 0.9 percent at 22,292.30
Shanghai - composite: DOWN 1.0 percent at 3,598.15
Dollar/yen: UP to 122.65 yen from 122.57 yen late Thursday
Euro/dollar: DOWN to $1.0602 from $1.0613
London - FTSE 100: UP 0.88 percent at 6,393 (close)
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