Asian markets fall on renewed Greek fears
HONG KONG—Asian markets fell on renewed fears for the eurozone after Greece was dealt an ultimatum over its plan to hold a referendum on last week’s deal to tackle the region’s debt crisis.
However, the euro bounced back from earlier lows after news emerged that Greece’s finance minister came out against his premier’s plan for the national poll, lifting hopes it might not go ahead.
France and Germany on Wednesday told Greece’s embattled prime minister that he must ensure the national vote he called on last Thursday’s European Union bailout plan is held as soon as possible so it can be put into action.
They warned that if Athens does not stick to the terms of the deal it will not get “one more cent” from the next planned installment of rescue funds.
German Chancellor Angela Merkel said: “Does Greece want to remain part of the eurozone or not?
“That is the question the Greek people must now answer.”
With the Greek public already fed up at swingeing cuts there is a chance they will vote “No” in a referendum, sending Greece and the eurozone into chaos and threatening another global financial meltdown.
Hong Kong tumbled 2.49 percent, or 491.21 points, to 19,242.50, Sydney ended off 0.30 percent, losing 12.7 points, to 4,171.9 and Seoul shed 1.48 percent, or 28.05 points, to 1,869.96.
Tokyo was closed for a public holiday.
Papandreou stunned his European colleagues Monday when he said he would hold a national vote on the rescue package unveiled last Thursday after marathon talks in Brussels.
Merkel and French President Nicolas Sarkozy, meeting the Greek leader ahead of a G20 summit in Cannes, France, said they would withhold Athens’ crucial eight billion euro handout if the vote fails.
International Monetary Fund chief Christine Lagarde said the IMF would only decide on its next tranche of Greek aid after the referendum.
Papandreou agreed Greece’s future in the euro was at stake and said a vote could be called on December 4.
He did not reveal the wording of the referendum question, but said he was sure Greek voters wanted to stay in the bloc.
However, Greek Finance Minister Evangelos Venizelos said Thursday he opposed the referendum idea.
“Greece’s place in the euro is a historical conquest by the Greek people that cannot be placed in question … this cannot be made dependent on a referendum,” he said in a statement.
His announcement against the poll was followed by one from another minister soon after and means Papandreou had lost his majority in parliament and was in real danger of losing a confidence vote on Friday.
A defeat would mean the referendum would likely not go ahead.
The euro, which tumbled against the yen and dollar in Asian morning trade, rebounded in Europe.
The common unit was at $1.3791 early in London from $1.3746 in New York late Wednesday.
The euro also rose against the yen, buying 107.57 yen compared with 107.28 yen in New York.
The dollar held up following its gains against the yen this week after the Japanese government intervened to cap the unit’s rise.
The greenback bought 78.00 yen compared with 78.06 in New York Wednesday. The dollar jumped past 79 yen on Monday in reaction to the intervention after hitting a post-war record low of 75.32 earlier.
Attention will be on Cannes over the next few days, with talks focusing on Europe’s crisis.
In European markets, London’s FTSE 100 index dipped 0.08 percent to 5,479.67 points in early trade, Frankfurt’s DAX 30 shed 0.31 percent to 5,949.70 points while in Paris the CAC 40 rose 1.28 percent, or 45.34 points, to 3,154.22 points, reversing losses in the first minutes of trading.
Milan’s bourse fell as Italian 10-year government bonds struck a record yield above 6.402 percent, putting Italy’s borrowing costs close to unsustainable levels, and raising fears about the spread of Europe’s debt crisis.
Despite the ongoing fears about Europe, Shanghai stayed in positive territory on expectations China will soon begin to ease monetary policy after more than a year of tightening as leaders tried to rein in inflation.
Shanghai was 0.16 percent, or 3.98 points, higher at 2,508.09 by the close.
“Sentiment has improved as Beijing appears to have moved away from tightening towards selective easing,” Zhang Yuheng, an analyst at Capital-Care Securities, told Dow Jones Newswires.
New York’s main oil contract, light sweet crude for delivery in December, rose $1.72 to $92.85 per barrel.
Brent North Sea crude for December gained $1.88 to 109.74 per barrel.
At 1100 GMT gold was higher at $1,733.77 an ounce against $1,732.30 late Wednesday.
In other markets:
— Singapore fell 0.87 percent, or 24.71 points, to 2,810.04.
Keppel Land fell 2.56 percent to Sg$2.67 and Wilmar International shed 1.09 percent to Sg$5.45.
— Taipei shed 1.82 percent, or 138.14 points, to 7,460.31.
Acer fell 2.76 percent to Tw$33.5 while TSMC was 0.54 percent lower at Tw$73.5.
— Manila closed 1.18 percent, or 50.16 points, lower at 4,210.25.
Philippine Long Distance Telephone Co. dropped 1.35 percent to 2,332 pesos while Universal Robina Corp. fell 3.96 percent to 44.85 pesos.
— Wellington closed flat, edging up 2.62 points to 3,311.51.
Contact Energy shed 0.5 percent to NZ$5.65 while Telecom gained 0.2 percent to NZ$2.615.
— Indian shares edged up 0.10 percent, or 17.08 points, to 17,481.93. India’s largest mobile phone firm Bharti Airtel rose 2.15 percent to 392.55 rupees while engineering giant Bharat Heavy Electricals Ltd rose 4.18 percent to 329.25 rupees.
— Kuala Lumpur lost 0.58 percent, or 8.58 points, to end at 1,462.37.
— Jakarta was 1.52 percent, or 57.22 points, lower at 3,705.81.
— Bangkok fell 0.85 percent, or 8.24 points, to 957.56.
