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Asian Stocks Sink as Oil Extends Drop While Aussie Slips

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Asian stocks dropped as oil’s slump underscored concern over the global economy. Japanese bonds climbed after Prime Minister Shinzo Abe secured victory in elections, while the Australian dollar retreated.

The MSCI Asia Pacific Index slid 1 percent by 10:26 a.m. in Tokyo, set for its lowest close since Oct. 17. Japan’s Topix index dropped 0.7 percent while shares in Hong Kong declined. The Aussie slipped 0.5 percent in a third day of retreat. West Texas Intermediate oil sank 1.6 percent to $56.87 a barrel, dropping for a fourth straight day. Standard & Poor’s 500 Index futures added 0.3 percent after the U.S. gauge slumped 1.6 percent Dec. 12 to cap its first weekly drop since mid October.

Oil prices have tumbled by more than $40 a barrel this year as the U.S. ramping up production coincides with signs of a slowdown from Europe to China. The International Energy Agency cut its global demand forecast for the fourth time in five months last week. In Japan, Abe’s ruling bloc won more than two-thirds of the seats in the lower house amid the lowest turnout since World War II, while the Tankan survey of confidence among manufacturers unexpectedly fell this quarter.

“A drop in oil stokes concern about growth and credit risk, and markets can’t ignore that,” Shoji Hirakawa, chief equity strategist at Okasan Securities Co. in Tokyo, said by phone. “Abe’s government will hold power for a longer period, which is positive for Abenomics. But there’s also concern he may shift his attention to national security.”

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