Asian shares slip on Europe summit fears
HONG KONG—Asian markets slipped Thursday on fears that a summit to save the eurozone might fail to deliver a knockout blow to the region’s two-year sovereign debt crisis.
As leaders of the European Union prepare for the crucial two-day talks starting on Thursday, Standard & Poor’s turned up the pressure on them to agree a plan by putting the EU itself on watch for a possible downgrade.
Tokyo shed 0.66 percent, or 57.59 points, to end at 8,664.58, Sydney lost 0.27 percent, or 11.8 points, to 4,280.7 and Seoul was 0.37 percent lower, dipping 7.03 points to 1,912.39.
Hong Kong fell 0.69 percent, or 132.77 points, to 19,107.81 while Shanghai gave up 0.12 percent, or 2.91 points, to close at 2,329.82.
The losses come after most markets rose over the past week on hopes that after several failed attempts, Europe’s leaders would finally resolve a crisis that threatens to tear the currency union apart and lead to another global downturn.
“To date, markets have been giving both events (European Central Bank and EU meetings) the benefit of the doubt, hoping that policymakers will deliver something to address the current crisis,” said Khoon Goh, senior strategist at ANZ Bank in Wellington.
“One gets the feeling that the market has gotten itself into an uncomfortable place in pinning so much hope on a deal being reached at the EU leaders summit,” he told Dow Jones Newswires.
The ECB will hold its policy meeting later on Thursday, where it is expected to cut interest rates by 0.25 percentage points for the second straight month to 1.0 percent.
The upbeat sentiment earlier this week – after France and Germany thrashed out a plan for tighter fiscal unity – has given way to trepidation as big differences emerged between EU leaders.
The biggest obstacles according to officials and diplomats are Germany’s refusal to embark on anything short of treaty change – which some say is unnecessary – while Britain refuses to budge on its opposition to tax reform unless it secures protection for the City of London finance centre.
However, German Chancellor Angela Merkel and French President Nicolas Sarkozy are willing to push for tighter fiscal laws for just the 17 euro members if countries such as Britain are not willing to join in.
The leaders must also agree on a firewall package to protect other nations from the same fate as Greece, Ireland and Portugal – who have needed bailouts – and prevent their debt troubles spreading.
Ahead of the summit, ratings agency S&P warned the EU itself was on watch for a downgrade of its AAA status, citing its dependence on its 27 member states for its budget needs.
The move comes after Monday’s decision by S&P to put 15 of the 17 eurozone countries on negative watch.
On currency markets, the euro eased to $1.3423 and 104.18 yen in early Asian trade from $1.3413 and 104.15 yen in New York late Wednesday.
The dollar was at 77.59 yen compared with 77.65 yen.
The Australian dollar lost ground on news the country’s unemployment rate rose to a higher-than-expected 5.3 percent in November from 5.2 percent in October.
The Aussie was fetching US$1.0262, from US$1.0281 just ahead of the employment report.
New York’s main contract, light sweet crude for delivery in January, rose 16 cents to $100.65 a barrel.
Brent North Sea crude for January delivery gained 47 cents to $110.00.
Gold was trading at $1,738.40 an ounce at 1045 GMT, from $1,728.60 late Wednesday.
In other markets:
— Singapore closed down 1.95 percent, or 54.24 points, at 2,728.31.
Fraser and Neave dived 5.90 percent to Sg$6.06 and DBS Group shed 3.68 percent to Sg$12.30.
— Taipei fell 0.71 percent, or 50.10 points, to 6,982.90.
Leading smartphone maker HTC lost 3.15 percent to Tw$414.5 while design house MediaTek was 2.47 percent lower at Tw$257.0.
— Manila was flat, edging down 2.28 points to 4,312.89.
Lepanto Consolidated Mining fell 2.3 percent to 1.70 pesos, Philippine Long Distance Telephone shed 1.2 percent to 2,450 pesos and property developer Ayala Land was down 2.3 percent at 15.64 pesos.
— Wellington closed 0.40 percent, or 13.10 points, lower at 3,269.95.
Westpac fell 0.7 percent to NZ$28.30, Fletcher Building fell 2.06 percent to NZ$6.18 and Telecom was up 2.5 percent at NZ$2.08.
— Kuala Lumpur shares fell 0.68 percent, or 10.07 points, to 1,472.92.
Proton Holdings gained 0.3 percent to 4.05 ringgit, Tenaga Nasional added 1.1 percent to 5.52 ringgit and Malayan Banking lost 1.1 percent to 8.21 ringgit.
— Jakarta lost 0.30 percent, or 11.47 points, to end at 3,781.76.
Bank Mandiri fell 0.8 percent to 6,650 rupiah, carmaker Astra lost 0.4 percent to 72,650 rupiah and Bank Rakyat Indonesia rose 0.8 percent to 6,750 rupiah.
— Bangkok dipped 0.33 percent, or 3.49 points, to end at 1,043.24.
— Mumbai shares slid 388.82 points, or 2.30 percent, at 16,488.24.
