Asian markets mixed, Greek referendum fears weigh

HONG KONG—Asian markets were mixed Wednesday, with fears a Greek referendum on its bailout deal could derail Europe’s plan to fix its debt crisis, while Chinese shares rose on hopes for looser monetary policy.

Tokyo skidded 2.21 percent, or 195.10 points, to 8,640.42, Sydney ended 1.14 percent, or 48.3 points, lower at 4,184.6 and Seoul lost 0.61 percent, or 11.62 points, to 1,898.01.

However, Hong Kong closed 1.88 percent, or 363.75 points, higher at 19,733.71 and Shanghai gained 1.38 percent, or 34.09 points, to 2,504.11.

The Greek prime minister’s call for a referendum and the possibility that the country’s voters would reject the EU bailout plan sent US and European shares sharply downward Tuesday, while also taking a toll on oil prices.

Bond markets were affected by fears that Italy could be the next eurozone nation to face a debt crisis, with the yield on the country’s 10-year bonds hitting 6.2 percent, close to the record reached in August.

In Asian trade Wednesday, Italy’s benchmark 10-year bonds were yielding 6.08 percent.

Embattled Greek Prime Minister George Papandreou won the unanimous backing of his cabinet for a referendum on the sweeping bailout plan agreed just last Thursday, the government’s spokesman said early Wednesday.

His surprise call for a vote raised the possibility that the deal would unravel, leaving Greece on the path to a default.

“Greece’s referendum and various doubts about the agreement itself mean that the situation has gone back to square one,” said Mitul Kotecha, strategist at Credit Agricole.

“Markets are seriously pondering a disorderly default in Greece.”

Japan’s finance minister said Wednesday that the referendum move had “confused people,” ahead of a Group of 20 meeting in France Thursday where the issue was expected to top the agenda.

“Greece’s abrupt announcement on holding a referendum, which was not included in (the earlier agreed deal), has confused people,” Jun Azumi told reporters.

Taiwan’s central bank governor Perng Fai-nan was more blunt, saying the move was like “throwing a bomb to financial markets,” Dow Jones Newswires reported.

A Greek vote against the plan would scupper the EU deal, which is designed to cut Athens’ 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.

Wall Street plunged on Tuesday, with bank shares pulling down the broad-based S&P 500-stock index by 2.8 percent.

The blue-chip Dow Jones Industrial Average dropped 2.5 percent, while the tech-heavy Nasdaq Composite slid 2.9 percent.

Investors were also jittery after Beijing said Tuesday that China’s official purchasing managers’ index dropped to 50.4 in October from 51.2 in September, suggesting the global economy’s main growth driver was losing steam.

Anything above 50 is seen as growth while a reading below indicates contraction.

However, Shanghai and Hong Kong staged an afternoon recovery on hopes Beijing will reverse a monetary tightening policy it has been following for more than a year in a bid to tame stubbornly high inflation.

“Given the financial turmoil in Europe, there is growing expectation in the market that Beijing will be more open to loosen its policies,” Wu Dazhong, an analyst at Shenyin Wanguo Securities, said.

China’s leaders have since October last year raised interest rates five times and increased the amount of cash banks must keep in reserve, effectively restricting their lending capacity.

On currency markets, the euro fetched $1.3776 and 107.55 yen Wednesday compared with $1.3697 and 107.29 yen late Tuesday in New York.

The single currency tumbled as low as $1.3609 in New York, its lowest level since October 12 and well below the $1.42 level it reached last week after the eurozone plan was announced.

The dollar edged down to 78.06 yen from 78.34 yen, off rates above 79.00 yen in Tokyo on Monday after Japan’s first yen-selling intervention since August.

The Australian dollar was also lower, trading at 103.74 US cents from 104.36 late Tuesday.

New York’s main contract, light sweet crude for delivery in December, fell 68 cents to $91.51 per barrel in the afternoon.

Brent North Sea crude for December delivery shed 53 cents to $109.01.

At 0930 GMT gold, considered a safe haven during times of economic uncertainty, was higher at $1,732.30 an ounce against $1,701.60 late Tuesday.

In other markets:

— Singapore closed up 1.63 percent, or 45.40 points, at 2,834.75.

United Overseas Bank gained 1.83 percent to Sg$16.70 and Singapore Airlines was up 2.68 percent at Sg$11.48.

— Taipei fell 0.31 percent, or 23.56 points, to 7,598.45.

HTC fell 0.61 percent to Tw$653.0 while Taiwan Semiconductor Manufacturing Co was 0.14 percent higher at Tw$73.9.

— Manila ended 1.69 percent, or 73.31 points, off at 4, 260.41.

Philippine Long Distance Telephone was down 1.5 percent at 2,364 pesos and geothermal power producer Energy Development lost 1.1 percent to 6.03 pesos.

— Wellington closed 0.72 percent, or 23.88 points, lower at 3,308.89.

Fletcher Building fell 2.9 percent to NZ$6.45 and Auckland Airport shed 0.9 percent to NZ$2.335.

— Kuala Lumpur slipped 0.32 percent, or 4.69 points, to end at 1,470.95.

Petronas Chemicals lost 2.04 percent to 6.24 ringgit, while CIMB Group Holdings dropped 2.40 percent to 7.31 ringgit. UOA Development climbed 0.63 percent to 1.59 ringgit.

— Jakarta rose 2.12 percent, or 78.02 points, to 3,763.03.

— Bangkok edged up 0.96 percent, or 9.21 points, to 965.80.

— Mumbai ended flat, edging down 15.98 points to 17,464.85.

India’s largest mobile phone firm Bharti Airtel fell 2.63 percent to 384.3 rupees while private ICICI Bank fell 0.93 percent to 886.85.