Asian shares fall after European sell-off
HONG KONG—Asian shares mostly fell on Tuesday with Tokyo hitting a two-year low following a huge sell-off in Europe as renewed eurozone debt woes added to already weak confidence in the global economy.
In early European trade, the euro rebounded and the yen tumbled after the Swiss central bank said it would not let the single currency sink below 1.20 Swiss francs as officials tried to assure investors amid fears over the eurozone.
Tokyo fell 2.21 percent, or 193.89 points, to 8,950.57, its lowest level since April 2009, while Seoul ended 1.07 percent, or 19.12 points, lower at 1,766.71 and Sydney shed 1.60 percent, or 66.4 points, to 4,075.5.
Shanghai was 0.33 percent, or 8.22 percent, off at 2,470.52 but late bargain-hunting saw Hong Kong recover earlier losses to close up 0.48 percent.
The Hang Seng Index closed 94.10 points higher at 19,710.50.
The falls extended selling from Monday after a dismal batch of US jobs data raised concerns of a double-dip recession in the world’s biggest economy.
They also followed massive losses in Europe, where financials were heavily hit after International Monetary Fund chief Christine Lagarde warned banks needed extra capital to withstand any contagion from the eurozone debt crisis.
The head of the European Central Bank Jean-Claude Trichet also warned Monday of an immediate and imperative need for enactment of a second debt rescue for Greece, and tightened discipline in the management of eurozone economies.
London’s FTSE 100 dropped 3.58 percent, in Paris, the CAC 40 fell 4.73 percent and Frankfurt’s DAX plunged 5.28 percent to a two-year low.
US markets were closed on Monday for the Labor Day bank holiday.
Adding to the European woes was news the European Union and IMF left a critical audit of Greek finances unfinished saying more budget work was needed, while Athens admitted its deficit target was in trouble.
Also negative for the euro was news that German Chancellor Angela Merkel’s Christian Democrats (CDU) suffered an election defeat in her home state Sunday, with the news unsettling the market, dealers said.
Selling of bank stocks was exacerbated by a US decision to take legal action against 17 leading international lenders over securitised mortgage trading at the heart of the 2008 financial crisis.
ECB data showed that eurozone banks have deposited record amounts of overnight funds with it, a signal of reluctance by banks to lend to each other.
The ongoing troubles in the eurozone weighed on the region’s currency.
In forex markets the euro fell in Asia to a one-month low of $1.4062, compared with $1.4109 late in London Monday. It was also at 107.94 yen from 108.57 yen. The dollar bought 77.27 yen compared with 76.86 yen in London.
However, the Swiss National Bank said it would peg the euro to 1.20 Swiss francs, sending the euro soaring early in Europe on Tuesday.
By 0830 GMT, the euro was at $1.4177 and 109.30 yen while the dollar jumped to 77.08 yen.
The euro surged to 1.2001 after hitting 1.1019 Swiss francs earlier Tuesday in Asia.
The price of gold was at $1,901.70 an ounce by 0800 GMT after hitting a record high 1,920.90 earlier as traders sought a safer place to invest their cash.
“The Greek debt problem is of utmost concern on most investors’ minds,” said Hideyuki Ishiguro, a strategist at a Japanese securities firm, noting the upcoming Greek sovereign debt rollover deadline.
“It’s too scary to buy stocks before we find out how this will pan out,” he told Dow Jones Newswires.
And Tim Condon, economist at ING, said: “The selloff in European risk assets is becoming disorderly. US Treasuries may be a preferred safe-haven asset but Asian local currency government bonds also are candidates.”
On oil markets New York’s main contract, light sweet crude for delivery in October, dived $2.82 to $83.63 per barrel.
Brent North Sea crude edged up 29 cents to $110.37.
In other markets
— Taipei fell 2.44 percent, or 184.38 points, to 7,367.19.
Leading design house MediaTek fell 3.86 percent to Tw$274.0 while Formosa Plastics was 3.52 percent lower at Tw$85.0
— Manila closed 1.81 percent, or 79.48 points, lower at 4,303.08.
Lepanto Mining fell 2.6 percent to 1.50 pesos, San Miguel tumbled 4.0 percent to 120 pesos and Metropolitan Bank slid 3.5 percent to 70.45 pesos.
— Wellington fell 0.69 percent, or 22.57 points, to 3,270.56.
Telecom rose 1.7 percent at NZ$2.44, Fletcher Building closed unchanged at NZ$7.58 and Auckland Airport fell 3 percent to NZ$2.26.
— Singapore closed flat, adding just 1.16 points to 2,774.33.
Singapore Airlines fell 0.56 percent to 10.66 while City Developments gained 0.39 percent to 10.19.
–Jakarta rose 0.62 percent, or 23.80 points, to 3,889.97.
Heavyweight Telkom jumped 1.3 percent to Rp 7,650, rival Indosat rose 5.5 percent to Rp 5,800, and car maker Astra increased 1.0 percent to Rp 68,500.
— Kuala Lumpur was down 0.60 percent, or 8.75 points, to close at 1,454.37.
Plantation firm IOI Corp lost 3.0 percent to 4.56 ringgit, while financial firm RHB Capital inched down 0.6 percent to 8.25. Gaming giant Genting gained 0.8 percent to 9.55 ringgit.
— Bangkok edged up 0.61 percent, or 6.37 points, to 1,055.60.
PTT lost 5 baht to 319, while Siam Cement added 2 baht to 323.
— Mumbai closed up 0.89 percent, or 149.48 points, to 16,862.81 on bargain hunting in index heavyweights.
India’s largest private firm Reliance Industries rose 4.05 percent or 31.95 rupees to 820.85 while auto maker and farm equipment firm Mahindra and Mahindra rose 3.31 percent to 794.25.
Original posted: 3:10 pm | Tuesday, September 6th, 2011
