Nuclear test hurts Asian markets

HONG KONG (Reuters) -- The yen slid to an eight-month low, Asian stocks skidded and oil and gold rose on Monday after North Korea said it had conducted a nuclear test.
Worries about North Korea had cast a shadow over otherwise strong Asian markets in the past several days as investors braced for an escalation of tensions.

Regional stock markets fell across the board, with South Korea hardest hit.
The benchmark KOSPI stock index dropped as much as 3.6 percent to levels last seen on Aug.

14, before settling down 2.41 percent - its biggest one-day percentage fall since June 13. The won plumbed two-month lows.

Japan's financial markets were closed for a public holiday on Monday, but the MSCI's index of shares in Asia outside of Japan was down about 1 percent.
The economy of North Korea is virtually closed from the rest of the world and its regional impact won't be very significant unless there was a major military confrontation, said Wang Qing, an economist at Bank of America in Hong Kong.
Pyongyang's official Korean Central News Agency said there was no leak or danger from the test.

South Korea and U.S. geological officials said they had detected a tremor at a suspected nuclear test site in North Korea on Monday morning.

Increasing international tension is likely to be taken as an incentive to sell the yen, said Masafumi Yamamoto, currency strategist at Nikko Citigroup in Tokyo.
If the situation intensifies as it did before the start of the Iraq war, it will have a negative impact on financial markets.
The dollar rose as high as 119.

29 yen, its highest since early February, after the reports on the nuclear test, and the euro strengthened above 150.
The dollar also found support on expectations that U.S.

interest rates were unlikely to fall any time soon after a government report on Friday showed strength in the jobs market.

Elsewhere, Hong Kong's Hang Seng index and Singapore's Straits Times Index both fell more than 1 percent.
Main indexes in Jakarta, Sydney, Bangkok and Manila all slid.

Among the losers, Australia's ( ) fell 2.35 percent after the government launched the sale of about a third of its remaining stake in the top phone company, to raise about A$8 billion ($6 billion).
Taiwan's financial markets were closed for a public holiday, but TSMC, the world's top contract maker of microchips, reported a 6.

5 percent rise in its September unconsolidated sales.
U.S.

stocks struggled early Monday after North Korea's nuclear test unnerved investors, despite several key corporate deals in the works. European stocks gained on Monday, boosted by a rise in oil and gas firms as crude and gold prices advanced.
U.

S. crude rose to $60.91 a barrel, although dealers said the main focus of the market was on a formal move expected on Monday by OPEC to cut 1 million barrels a day of crude from oversupplied markets.

However, the geopolitical tensions played a part.
This is the sort of thing that causes tension in the world, and tension is associated with bumps upwards in oil prices, said John Vautrain, vice president of energy consultancy Purvin and Gertz in Singapore.
Spot gold climbed more than 1 percent to $582 an ounce, up from around $573.

30 on Friday, with buying picking up after the North Korea reports.
However, bullion traders said trading volumes were low so price movements were exaggerated.