Asian markets fall after drop on Wall Street

Most Asian stock markets fell Tuesday, hit with renewed fears over U.S. credit problems and their impact on financial companies after weakness a day earlier on Wall Street. Japanese shares dropped to their lowest level in nearly three months.

Hong Kong, Taiwan, India and South Korea stocks also declined, but mainland China's markets climbed.

Investors were jittery despite lower oil prices after shares of U.S. mortgage purchasers Fannie Mae and Freddie Mac tumbled in New York following a Federal Reserve official's warning that housing market problems would likely extend into next year. The two institutions were also pulled lower after Lehman Brothers analysts said possible accounting changes could leave them short of capital reserves.

In Japan, the benchmark Nikkei 225 Stock Average slid 2.5 percent, to 13,033.10 _ its lowest close since April 16.

Securities, mining, banking and consumer finance issues all suffered.

Sumitomo Mitsui Financial Group, Inc. and Resona Holdings, Inc. both plunged 4.1 percent. Nomura Holdings Inc., Japan's biggest broker, retreated 4.6 percent.

Japanese exporters succumbed to a weakening dollar, which traded at 106.34 yen late afternoon Tuesday, down from 107.14 yen Monday in New York. A stronger yen reduces the value of sales repatriated from abroad.

Toyota Motor Corp. dropped 1.2 percent; Sony was off 4.1 percent.

In Hong Kong, the blue-chip Hang Seng Index lost 3.2 percent to close at 21,220.81 as traders reacted to the U.S. market's performance and regional declines.

Aluminum Corp. of China, also known as Chalco, shed 5.6 amid reports that it may see lower output at two mainland plants.

Oil companies were off. China Petroleum & Chemical Corp., or Sinopec, fell 2.7 percent despite lower crude prices, which help the refiner's margins. Upstream oil producer CNOOC lost 3.4 percent.

Hong Kong Exchanges & Clearing, which runs the stock exchange, and handset manufacture Foxconn International Holdings both retreated on analyst downgrades.

In other markets, Taiwan's main stock benchmark plummeted nearly 4 percent, weighed down by losses in the financial sector. In India, the main Sensex index fell 1.3 percent.

Bucking the trend, mainland China's shares rose for a second day, with news that the government was postponing a resource tax lifting coal producers and hopes for an Olympics-led tourism boost pushing up airline stocks.

The benchmark Shanghai Composite Index rose 0.8 percent to 2,814.95 points.

Shares in Chinese coal producers climbed after the official newspaper China Securities News reported that the government delayed a planned resource tax over concerns it might fuel inflation.

Shares in midsize producer Anhui Hengyang Coal Ltd. rose by the full daily limit of 10 percent. China Shenhua Energy Corp., China's biggest coal producer, rose 3 percent.

Airlines also were higher, adding to recent gains on investor expectations of strong tourism growth for August's Beijing Olympics. Air China Ltd., the country's No. 2 carrier by passenger count, rose 6.8 percent. Industry leader China Southern Airlines Corp. rose 2.2 percent.

The main Shanghai index has gained 6.1 percent since hitting a 16-month low of 2,651.6 on July 1. But it is still off 54 percent from its all-time high of 6,092.06 points on Oct. 16.

In other currency dealings, the dollar held steady against the euro at $1.5723.