Asian Stocks End Lower; Europe Slips

Updated from 4:20 a.m. EDT

HONG KONG -- Asian markets closed lower Monday, with Chinese shares tumbling 6.7% and Japanese stocks edging down after the country's opposition party came to power in a landslide victory. Stocks in Europe were lower.

Shanghai's market was hit with another bout of heavy selling, reflecting unease about government measures that could slow the liquidity that has sent the market surging this year. Analysts also pointed to lingering worries about a flood of new shares in the market.

Major refiner China Petroleum & Chemical (SNP Quote) fell by the daily maximum 10%, while PetroChina(PTR Quote), the Shanghai index's heaviest weighted share, fell 5.9%.

"China's market is still searching for support," said Winson Fong, managing director at SG Asset Management in Hong Kong, which oversees about $2 billion in equities in Asia. "The market has gone up so much already it makes sense for the momentum to slow for a time."

In Japan, investors tread cautiously after the Democratic Party of Japan swept to power in national elections over the weekend amid frustrations with the ruling party as the world's second-largest economy emerges from its worst downturn in decades.

Tokyo's Nikkei 225 stock average closed lower by 0.4% to 10,492.53. Hong Kong's Hang Seng lost 1.9%.

Wall Street ended last week on a down note, with the Dow Jones Industrial Average falling 36.43, or 0.4%, to 9,544.20 in somewhat quiet trading.

The S&P 500 index fell 2.05, or 0.3%, to 1,027.76, while the Nasdaq composite index rose 1.04, or 0.1%, to 2,028.77.

With Wall Street futures lower, U.S. markets were poised for more losses on Monday.

Stock in Frankfurt and Paris were both down 0.7%. London's markets were closed for a holiday.

Crude oil prices dropped, with the benchmark contract for October delivery lower by $1.60 to $71.14 a barrel. The contract rose 25 cents on Friday.

The dollar fell to 92.99 yen from 93.42 yen. The euro traded lower at $1.4288 from $1.4306.