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North Korean nuclear test batters shares across Asia

Hugo Duncan
26 May 2009


Shares in Asia fell today as concerns over North Korea's nuclear programme gripped the region.

Major markets such as Japan and South Korea drifted lower as tensions on the Korean Peninsula showed no sign of easing.

In London, the FTSE 100 index was down 15.16 at 4350.13, having been closed yesterday for the Bank Holiday.

Yesterday's nuclear test was met with international condemnation but North Korea remained defiant and stepped up its weapons testing by firing two short-range missiles this morning.

The MSCI Asia Pacific Index fell 0.2% having risen more than 40% since its low in March. The Kospi sank 2% in South Korea and the Nikkei 225 was down in 36.19 in Japan.

Analysts said that while the nuclear tests hit sentiment, it was also a good excuse to take a breather from the recent rally, which has seen share prices around the world rebound sharply in recent weeks.

"The North Korean missile test is providing investors a reality check," said Roger Groebli, Singapore-based head of financial markets analysis at LGT Capital Management. "Valuations in Asia are a little rich."

North Korea announced it had carried out a nuclear test early yesterday, leading to worldwide condemnation.

The UN strongly criticised the move and diplomats have begun drafting a resolution to punish the communist state.

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