Asian shares drift lower on Greece worries

HONG KONG – Asian markets drifted lower Monday as Greek officials scrambled to form a unity government and pick a new leader amid frantic efforts to keep the debt-ridden nation in the eurozone.

Tokyo was off 0.55 percent, Sydney was 0.34 percent lower in morning trade, Seoul edged down 0.14 percent while Hong Kong inched up 0.12 percent, reversing earlier losses. Chinese shares were off 0.48 percent in early trade.

The euro eased against the dollar in Asian trade, fetching $1.3763 and 107.53 yen against $1.3788 and 107.89 in New York late Friday.

A new Greek prime minister and cabinet were to be named Monday after a historic power-sharing deal was reached in dramatic late-night talks Sunday, with embattled premier George Papandreou agreeing to quit.

Papandreou had drawn widespread criticism last week over plans to put a debt-bailout package to a national vote, raising fears a package to contain the eurozone’s debt crisis would evaporate.

The move stunned fellow European leaders, sent global markets into a tailspin and earned him a humiliating dressing-down at a G20 summit in France. Papandreou hastily retracted the proposal.

At the G20 meeting Italy’s Prime Minister Silvio Berlusconi was also forced to accept IMF oversight of his budget-cutting programme, but talks on how to fix the eurozone debt crisis yielded little in the way of concrete details.

It remained unclear whether news of a new leader in Athens would calm jittery markets.

Fears the debt crisis will spread helped send the yield on 10-year Italian debt to a record high last week, climbing over 6.3 percent and raising fears Italy would soon be unable to finance its huge public debt.

“While there may be arrangements which are being broadcast by the major political heads across Europe, they’ve still got to execute on that,” said Jamie Spiteri, equities dealer at Shaw Stockbroking in Sydney.

Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities, said that with eurozone finance ministers set to meet later in the day “the focus will likely shift to rising Italian bond yields”.

Officials are also expected to discuss whether to release an eight billion euro ($11 billion) slice of bailout cash that Greece’s finance minister has said is crucial to keep the nation afloat.

European leaders have become increasingly frustrated at the political impasse in Athens at a time when they want to press ahead with hard-won agreements reached in late October on tackling the eurozone’s fiscal woes.

The new government will be tasked with implementing the terms of an October EU bailout deal that calls for further harsh austerity measures on Greece, already at breaking point due to a shrinking economy and rapidly rising unemployment.

On Friday, US government data showed that country recorded slightly lower unemployment in October, dipping to 9.0 percent, but that did little to convince markets of a sustained recovery in the world’s biggest economy.

The Dow Jones Industrial Average dropped 0.51 percent, the tech-heavy Nasdaq Composite shed 0.44 percent, while the S&P 500-stock index was 0.63 percent lower.

In Asian trade Monday the dollar bought 78.13 yen compared to 78.23 yen.

New York’s main oil contract light sweet crude for December delivery was 24 cents higher at $94.50 a barrel, while Brent North Sea oil for December delivery advanced $1.31 to $113.28.

At 0230 GMT gold was higher at $1,764.29 an ounce against $1,758.50 late Friday.