Asian markets fall after deadly Boston Marathon blastsContinue reading the main story
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Key Asian markets declined in Tuesday trading after two explosions at the Boston Marathon in the US killed three people and injured dozens more.
Japan's Nikkei index closed 0.4% lower, having registered earlier falls of up to 2%. Oil and gold prices also fell.
Earlier on Monday, US markets closed lower after the blasts accelerated a sell-off started by weak economic data.
Analysts said that investors would be more risk averse in coming sessions and would focus on Asia's problem areas.
"This is a kind of unknown-unknown event and a stark reminder that the world continues to remain unsafe," said Vishnu Varathan of Japanese bank Mizhuo.
"While it has happened far away from Asia, it is likely to trigger concerns and fears over Asia's known-unknowns.
"You have the Korean peninsula tensions, the territorial dispute between China and Japan, and other issues in the China Sea which all pose risks if they flare up," he added.Risk aversion
Faced with these problems, investors reacted to the news of the blasts by trying to cut risks, not least because in recent weeks stock markets in Asia have seen strong gains.
South Korea's Kospi fell up to 0.9% before recovering to end flat, while Australia's ASX 200 shed 0.3%.
End Quote Michael McCarthy CMC Markets
The developments in Boston are likely to trigger an initial reaction of caution”
In the US, all three of the country's main stock indexes closed lower on Monday. The Dow Jones ended the day down 1.8%, while the S&P shut 2.3% lower and the Nasdaq shed 2.4%.
Oil prices dropped in Asia, with US light crude down by 1.9%, and Brent crude sliding 1.6%. Gold continued to fall, extending Monday's 10% fall and continuing to hit its lowest levels in two years.
By contrast, the Japanese yen gained against the US dollar because many investors see it as a less risky asset.
"The developments in Boston are likely to trigger an initial reaction of caution," said Michael McCarthy, chief market analyst at CMC Markets.
The Japanese currency rose as much as 2.5% to 96.61 yen against the US dollar in New York on Monday. It also gained nearly 3% against the euro, rising as high as 125.98 yen against the single European currency.
Analysts said that many large Japanese banks or pension funds tended to sell riskier assets during times of uncertainty, bringing the money back into the country, resulting in an appreciation in the yen's value.
Knowing this, other global investors also buy the yen, or yen-denominated assets, to benefit from this gain. However, once the risks recede, then investors tended to sell their yen and use the proceeds to again invest in riskier assets.Asia's problems
Analysts said the blasts had further dented investor morale in both Asia and elsewhere, which had already been shaken by weaker-than-expected Chinese and US data.Continue reading the main story
They also pointed to a number of potential Asian flashpoints that caused investors to be cautious, such as the heightened tensions on the Korean peninsula.
North Korea has recently conducted a nuclear test, and in recent weeks it has also threatened to attack South Korea, Japan and US bases in the region.
Meanwhile, the spat between China and Japan over a set of disputed islands in the East China Sea has flared up. The issue is yet to be resolved and continues to remain a bone of contention between Asia's two biggest economies.
Analysts have often have warned that an escalation of any of these issues was likely to hurt the region's economic growth.
"Asia is increasingly relying on intra-regional trade to sustain its economic growth," said Mr Varathan of Mizhuo. "Any full-blown conflict between Asian nations will hurt trade and could adversely impact economic growth."