Asian shares down on European debt fears
HONG KONG—Asian stock markets ended mixed in edgy trade Wednesday amid growing concern about the eurozone sovereign debt crisis and a possible Greek default.
The euro faced selling pressure after ratings agency Moody’s downgraded two top French banks due to their exposure to the eurozone woes while investors were also spooked by comments from Chinese premier Wen Jiabao warning of a tough road ahead for Europe’s indebted countries.
Attention is now on a conference call between the leaders of Greece, France and Germany as they try to navigate a way out of the crisis.
Tokyo fell 1.14 percent, or 97.98 points, to 8,518.57 and Sydney shed 1.64 percent, or 66.9 points, to 4,005.8.
Seoul ended down 3.52 percent, or 63.77 points, to 1,749.16, with dealers playing catch-up with heavy losses at the start of the week, when the KOSPI was closed for a public holiday.
However, Hong Kong staged a late bargain-hunting rally to end slightly higher, adding 14.90 points to 19,045.44 while Shanghai gained 0.55 percent, or 13.53 points, to 2,484.83.
Mumbai rose 1.47 percent, or 242.16 points, to 16,709.6, also on bargain hunting, despite figures showing annual inflation jumped by more than half a percentage point to 9.78 percent in August.
Traders remained tense despite an upbeat lead from New York, where all three major indices posted healthy gains on hopes for a good outcome from Wednesday’s three-way talks.
The Dow rose 0.40 percent, the S&P 500 added 0.91 percent and the tech-heavy Nasdaq rallied 1.49 percent.
The teleconference between German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou comes after markets were hammered on Monday by renewed fears of a Greek default.
But Germany and France denied rumors that they had new proposals for a Greek rescue plan.
The euro and stock markets were buoyed on Tuesday by reports that China was in talks to buy Italian government bonds.
However, dealers remain tense as they fear Greece’s troubles are far from over, while there are also concerns that other economies could be sucked into the crisis, with Italy and Spain the most at risk.
“The market is certainly cheap (after recent falls), but there is a lot of caution about,” said Macquarie Private Wealth investment adviser James Rosenberg.
“The European debt crisis is not over and this is just a lull in the storm. Global risks have risen in the past month,” he told Dow Jones Newswires.
Adding to the sense of foreboding, Wen said in his speech to open the World Economic Forum in Dalian that China would continue to invest in the troubled eurozone but said the region’s leaders had to “put their houses in order.”
“Sovereign debt risks are growing in some countries, causing turbulence on the international financial market,” he said.
“Unemployment in major economies remains high, while emerging economies are facing upward inflationary pressure. All this shows that the world economic recovery will be a long-term, difficult and complicated process.”
On currency markets the euro was weighed after Moody’s said it had cut by one notch the debt ratings of France’s Credit Agricole and Societe Generale, while BNP Paribas was kept on negative watch for possible downgrade later.
The euro was at $1.3660 in early European trade, down from $1.3689 in New York late Tuesday but well up from the $1.3500 it touched on Monday.
The European common currency also fell to 105.05 yen from 105.21 in New York, but also higher than the 10-year lows around 104 seen on Monday.
The dollar was at 76.90 yen, just off the 76.91 in New York.
Oil prices were depressed due to worries that the eurozone crisis will dampen demand.
New York’s main contract, light sweet crude for delivery in October, was down $1.48 to $88.73 a barrel in afternoon trade, and Brent North Sea crude for October settlement eased 59 cents to $111.30.
Gold was trading at $1,828.30 an ounce at 0800 GMT on Wednesday, up from $1,818.60 in late trade Tuesday.
In other markets:
— Singapore closed 0.37 percent, or 9.98 points, higher at 2,739.35.
Oil rig maker Keppel Corp climbed 35 percent to Sg$8.55 and media giant Singapore Press Holdings advanced 1.66 percent to Sg$3.68.
— Taipei fell 2.20 percent, or 162.90 points, to 7,228.47.
Fubon Financial Holding was off 3.29 percent at Tw$35.3 while Taiwan Semiconductor Manufacturing Co was 1.75 percent lower at Tw$67.2.
— Manila fell 0.79 percent, or 34.05 points, to 4,258.86.
SM Investments fell 0.5 percent to 549.50 pesos, Lepanto Mining shed 5.1 percent to 1.29 pesos and geothermal power producer Energy Development lost 0.3 percent to 6.11 pesos.
— Wellington fell 0.65 percent, or 21.30 points, to 3,264.11.
Fletcher Building was 1.2 percent lower at NZ$7.62, Sky City lost 2.0 percent to NZ$3.38 and Telecom was unchanged at NZ$2.52.
— Jakarta lost 1.95 percent, or 75.75 points, to close at 3,799.03.
— Kuala Lumpur closed 0.72 percent, or 2.39 points, lower at 1,437.61.
MMC Corp ended 2.7 percent lower, while the country’s leading diversified conglomerate Sime Darby closed down 2.6 percent. Gaming giant Genting Malaysia fell 1.8 percent.
— Bangkok fell 0.84 percent, or 8.71 points, to 1,022.96.
