Asian markets hurt by fresh Europe fears
HONG KONG—Renewed concerns over the European debt crisis and a big fall on Wall Street hit most Asian markets on Tuesday while the euro remained under pressure after suffering heavy losses overnight.
Adding to weaker sentiment was data from China showing manufacturing activity slowed last month, indicating expansion of the world’s second-biggest economy is continuing to slow.
Tokyo fell 1.70 percent, or 152.87 points, to 8,835.52, Sydney lost 1.52 percent, or 65.2 points, to end at 4,232.9 and Hong Kong tumbled 2.49 percent, or 494.91 points, to 19,369.96.
Seoul closed flat, edging up 0.60 points to 1,909.63, while Shanghai was also flat, ticking 1.77 points, higher at 2,470.02.
After last week’s impressive global rally in the wake of a European plan to tackle its crushing debt crisis, traders have grown concerned about the lack of detail.
Jitters were further heightened after embattled Greek Prime Minister George Papandreou called Monday for a confidence vote and a referendum on last week’s deal, taking a political gamble to silence growing opposition to his policies.
An adverse result in either process would scupper the EU deal, which is designed to cut Greece’s debt load of more than 350 billion euros ($495 billion) by around 100 billion euros.
Last week’s plan also agreed to recapitalize banks to withstand the impact of a 50 percent loss on their Greek bonds as well as boost the European Financial Stability Facility rescue fund and provide Athens with a fresh bailout.
Fears sent Wall Street tumbling, with the Dow losing 2.26 percent, the Nasdaq 1.93 percent off and the S&P 500 down 2.47 percent.
US traders were also spooked by news of the eurozone’s first major US casualty. Brokerage MF Global filed for bankruptcy protection following a string of losses from European public debt holdings.
European shares also plunged in early trade Tuesday, with Milan diving 5.02 percent, Paris off 4.03 percent, London down 2.11 percent, and Frankfurt slumping 3.22 percent.
The euro fell sharply to $1.3724 from $1.3851 late in New York on Monday.
The single currency was at $1.3701 against $1.3851 late Monday, and to 107.12 yen from 108.34 yen.
The dollar was flat at 78.18 yen, well off rates above 79.00 yen in Tokyo Monday after Tokyo’s first yen-selling intervention since August.
The greenback soared to 79.55 Monday after the Japanese government stepped into the currency markets when the US unit hit a record low 75.32 yen.
The Australian dollar fell after the central bank said it was cutting interest rates for the first time in more than two years, with the unit dipping to 103.48 US cents from 105.29 US cents.
Investors were also disappointed by figures showing China’s manufacturing growth had slowed in October.
The nation’s official Purchasing Managers Index (PMI) – based on a survey of 820 manufacturers – fell to 50.4 last month from 51.2 in September, below a median forecast of 51.7 from nine economists polled by Dow Jones Newswires.
A reading above 50 indicates the sector is expanding, while a reading below 50 suggests a contraction.
The reading puts an end to two consecutive months of increases, likely indicating that growth in manufacturing activity continued to slow as a result of Beijing’s tightening measures and slowing global growth.
While the PMI is consistent with a “reasonably moderate (economic) slowdown… clearly risks are skewed to the downside depending on what happens with the global economy,” Royal Bank of Canada economist Brian Jackson told Dow Jones Newswires.
HSBC, meanwhile, said its survey of more than 430 purchasing managers showed activity expanded slightly, with its index hitting 51.0 in October compared with 49.9 in September and the first time it has gone above 50 since June.
But while the banking giant’s data show activity picking up it is still very weak, indicating the economy continues to grow much slower.
Analysts said the government’s broader PMI survey was a more accurate reflection of the manufacturing, which they expect to deteriorate in the coming months.
On oil markets New York’s main contract, light sweet crude for delivery in December, was down 88 cents to $90.68, while Brent North Sea crude for December dropped 41 cents to $107.60.
At 1110 GMT gold was lower at $1,701.60 an ounce against $1,718.65 late Monday.
In other markets:
— Taipei rose 0.45 percent, or 34.32 points, to 7,622.01.
Hon Hai Precision, the parent company of tech giant Foxconn, gained 4.32 percent to Tw$86.9 while Taiwan Semiconductor Manufacturing Co edged up 0.27 percent to Tw$73.8.
— Bangkok fell 1.86 percent, or 18.16 points, to close at 956.59.
Banpu plunged 26 baht to 602 baht, while Siam Cement lost 3 baht to 312 baht.
— Indian shares slid 1.27 percent, or 224.18 points, to 17,480.83.
India’s private ICICI Bank fell 3.8 percent to 895.15 rupees while auto and farm equipment maker Mahindra and Mahindra fell 3.38 percent to 834.05
— Kuala Lumpur shares slid 1.09 percent, or 16.25 points, to 1,475.64.
Plantations giant IOI Corp. slipped 3.1 percent at 5.09 ringgit while infrastructure firm Gamuda dropped 1.2 percent to 3.36 ringgit. Drinks bottler Fraser and Neave climbed 1.2 percent at 17.20 ringgit.
— Singapore’s Straits Times Index closed down 2.33 percent, or 66.42 points, to 2,789.35.
Olam International fell 3.14 percent to Sg$2.47 and DBS Group shed Sg$3.07 percent to 11.98.
— Indonesian shares ended down 2.79 percent, or 105.83 points, to 3,685.01.
Aneka Tambang lost 5.59 percent to 1,690 rupiah, Astra International lost 3.62 percent to 66,500 rupiah, Indofood Sukses Makmur fell 4.76 percent 5,000 rupiah, Semen Gresik slid 5.26 percent to 9,000 rupiah and PT Timah fell 4.02 percent to 1,910 rupiah.
— Wellington closed flat, edging up just 0.21 points, to 3,332.77.
New Zealand Oil & Gas added 4.3 percent to NZ$0.73, Contact Energy rose 1.4 percent to NZ$5.68 and Telecom added 1.4 percent to NZ$2.57.
— Manila was closed for a public holiday.
