Asian markets jittery over Greece woes, China rally fizzles

A man watches an electronic stock indicator in Tokyo on Wednesday, Feb. 4, 2015. Concerns about Greece’s plans to renegotiate its bailout rattled Asian markets and pressured the euro Thursday, while Shanghai and Hong Kong shares ended down despite China cutting its funds reserve requirement for banks. AP

HONG KONG–Concerns about Greece’s plans to renegotiate its bailout rattled Asian markets and pressured the euro Thursday, while Shanghai and Hong Kong shares ended down despite China cutting its funds reserve requirement for banks.

Traders mostly took their cue from New York, which was hit by news that the European Central Bank would not allow Greek lenders to use government bonds to borrow cash, cutting off much-needed access to liquidity.

Tokyo tumbled 0.98 percent, or 174.12 points, to finish at 17,504.62 despite Sony surging 12 percent to a five-year high on an improved earnings outlook.

Sydney rose 0.58 percent, or 33.64 points, to 5,810.98–its 11th straight day of gains, while Seoul lost 0.51 percent, or 9.95 points, to 1,952.84.

Shanghai, which surged 2.45 percent in early trade, ended 1.18 lower, shedding 37.59 points to 3,136.53.

Hong Kong added 0.35 percent, or 85.73 points, to 24,765.49 having jumped 1.4 percent just after the opening bell.

Under the terms of its bailout Greece’s banks had been given a waiver to use government bonds–which have a junk rating–as collateral as long as Athens stuck to its obligations.

But the ECB said that it would no longer allow Greek banks to use government debt as collateral for loans after the newly elected Syriza party vowed to re-negotiate the terms of its international bailout.

The announcement came hours after new Greek Finance Minister Yanis Varoufakis held talks with ECB chief Mario Draghi, the latest stop in his Europe-wide charm offensive to drum up support for a new deal.

Varoufakis will also hold talks with his German counterpart Wolfgang Schaeuble on Thursday, a meeting that will be closely watched as Germany, the eurozone’s largest economy, is a key supporter of Europe’s austerity drive.

Athens said the move will have “no adverse impact” on its financial sector, saying it would be “fully protected,” with other liquidity channels still available.

However, Greece’s borrowing rate soared above the symbolic level of 10 percent in early European trade Thursday, from 9.678 percent the day before.

On Wall Street the Dow, which had surged during the day, ended flat Wednesday while the S&P 500 fell 0.42 percent and the Nasdaq lost 0.23 percent.

Fresh China easing 

The euro ended Wednesday at $1.1334 and 132.81 yen in New York, from $1.1470 and 135.00 yen earlier in Asia.

On Thursday in Tokyo the single currency bought $1.1337 and 132.78 yen.

The dollar was 117.12 yen on Thursday against 117.18 yen.

Shanghai stocks also sank despite China’s central bank on Wednesday cutting the percentage of cash lenders must keep in reserve to kickstart the mainland economy.

It was the first across-the-board cut since May 2012.

Official data last week showed the economy grew at its slowest pace in 24 years in 2014, while two separate gauges indicated manufacturing activity slipped in January.

It was the latest move by authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.

“The move is aimed at helping the real economy and should boost lending to the private sector,” Zhou Hao, a Shanghai-based economist at ANZ told Bloomberg News.

“It’s likely that there will be another reserve-requirement ratio cut early in the second quarter.”

In oil markets, US benchmark West Texas Intermediate for March delivery was down 55 cents at $47.90 a barrel and Brent crude for March eased 71 cents at $53.45.

Gold fetched $1,260.30 an ounce, against $1,267.80 on Wednesday.

In other markets:

— Taipei was flat, edging down 1.87 points to 9,512.05.

Taiwan Semiconductor Manufacturing Co. fell 0.34 percent to Tw$145.5 while Hon Hai Precision Industry closed 0.23 percent lower at Tw$87.3.

— Wellington added 0.21 percent, or 12.28 points, to 5,797.59.

Air New Zealand was up 1.97 percent at NZ$2.59 and Spark lifted 0.87 percent to NZ$3.49.

— Manila eased 0.54 percent, or 41.82 points, to 7,674.24.

SM Investments fell 0.94 percent to 896.50 pesos, Philippine Long Distance Telephone shed 0.13 percent to 3,082 pesos while Ayala Land was down 1.53 percent at 35.45 pesos.

— Kuala Lumpur closed flat, up 0.19 of a point, at 1,803.21.

Telekom Malaysia added 0.14 percent to 7.00 ringgit, Public Bank rose 0.44 percent to 18.44 while Tenaga Nasional lost 0.68 ringgit to 14.54 ringgit.

— Mumbai dipped slightly by 0.11 percent, or 32.14 points, to end at 28,850.97 points.

Tata Power Company fell 7.48 percent to 83.45 rupees, while information technology major Wipro gained 3.18 percent to 637.30 rupees.

— Jakarta ended down 0.67 percent, or 35.39 points, at 5,279.90.

Palm oil firm Astra Agro Lestari gained 3.49 percent to 24,450 rupiah, while retailer Ace Hardware Indonesia slipped 1.33 percent to 740 rupiah.

— Singapore closed down 0.32 percent, or 10.99 points, to 3,406.58.

Public transport firm ComfortDelgro rose 1.71 percent to Sg$2.97 while DBS Bank fell 0.92 percent to Sg$19.42.