Asian shares fall on European downgrades

HONG KONG—Asian markets fell and the euro remained under pressure on Monday after Standard & Poor’s cut the credit rating of nine European nations, including France and Austria’s triple-A status.

The news brought the eurozone debt crisis back to the forefront with traders looking ahead to a crucial week in the region as Greece struggles to come to an agreement with creditors over its repayments, raising fears it could default.

Sydney lost 1.16 percent, or 49.9 points, to finish at 4,145.9, Tokyo fell 1.43 percent, or 121.66 points, to 8,378.36, while Seoul ended 0.88 percent lower, or 16.41 points, at 1,859.27.

Hong Kong closed down 1.0 percent, or 192.22 points, at 19,012.22 while Chinese shares finished 1.71 percent lower, or 38.39 points, at 2,206.19.

Taipei lost 1.09 percent, or 77.92 points, to 7,103.62 despite Beijing-friendly President Ma Ying-jeou being handed a second term in weekend elections, a result that came as a relief to the United States and China.

S&P on Friday cut France’s and Austria’s top AAA rating by one notch to AA+ with a negative outlook, citing European leaders’ inability to come up with a solid plan to tackle the two-year fiscal crisis.

It also downgraded under-pressure Italy and Spain, which have already seen the interest on their bonds hit dangerously high levels.

Overall, nine countries had their ratings cut while seven had theirs affirmed. Greece was excluded.

The agency warned last month before a European summit aimed at hammering out a solution that it was putting the eurozone on review for a downgrade, adding that it would take the outcome of the talks into mind.

“The downgrades were widely anticipated and already priced (in),” Ric Spooner, chief market analyst at CMC Markets, said in a note.

“However, they set a nervous early tone for this week’s markets as we approach more significant hurdles in the evolution of the eurozone crisis,” he added, according to Dow Jones Newswires.

Eyes will now be on Greece this week as it holds talks with private banks over writing down part of its debt, which is considered vital to avoid a messy default.

Prime Minister Lucas Papademos said his country faced “acute economic dangers” without the writedown deal, which would wipe off 100 billion euros ($127 billion) from Greece’s massive debt burden and help unlock further international bailout aid.

However, talks at the weekend stalled, raising the prospect that Greece could tumble out of the eurozone with dire results for the region and the global economy.

In early trade, London’s benchmark FTSE 100 index slipped 0.05 percent, the Paris CAC 40 shed 0.06 percent while Frankfurt’s DAX 30 rose 0.25 percent.

The euro plummeted more than two US cents on Friday after the S&P announcement, hitting $1.2624 in New York late Friday, its lowest since August 2010.

However, the single currency was “here to stay” as a global currency and the eurozone currency bloc would bounce back from its fiscal crisis, Michel Barnier, European Union commissioner for the internal market, said Monday.

“Let there be no mistake: this is not a crisis of the euro as a currency,” he told delegates at the Asian Financial Forum, a gathering of regional banking and finance chiefs in Hong Kong.

“The euro is here to stay. In the last 10 years the euro has proven itself as a true world currency… And despite the difficulties, it remains strong.”

The single currency was trading hands Monday at $1.2664, while it rose off its intra-day low against the Japanese unit to trade at 97.25 yen, compared with 97.20 yen in New York.

The dollar was at 76.78 yen, edging down from 76.83 yen.

New York’s main oil contract, light sweet crude for delivery in February, gained 43 cents to $99.46 per barrel and Brent North Sea crude for February delivery was up 26 cents to $111.27 on its last trading day.

Gold was at $1,645.10 an ounce at 1155 GMT, against $1,642.25 late Friday.

In other markets:

— Manila lost 0.75 percent, or 34.91 points, to 4,578.92.

Philippine Long Distance Telephone Co. slid 1.0 percent to 2,726 pesos and Ayala Corp. shed 0.8 percent to 340 pesos.

— Kuala Lumpur closed down 0.92 percent, or 14.01 points, at 1,509.06.

Genting lost 2.9 percent to 10.56 ringgit, CIMB Group eased 1.1 percent to 7.19 and DiGi.com shed 1.0 percent to 3.86 ringgit.

— Indian shares rose 0.22 percent, or 34.74 points, to 16,189.36.

India’s engineering giant Bharat Heavy Electricals rose 3.67 percent to 276.6 rupees while carmaker Maruti Suzuki rose 2.89 percent to 1,004.65 rupees.

— Singapore closed down 1.26 percent, or 35.05 points, at 2,756.49.

Real estate developer CapitaLand lost 2.08 percent to Sg$2.35 and United Overseas Bank shed 0.98 percent to Sg$16.18.

— Indonesian shares fell 0.7 percent, or 25.63 points, at 3,909.69.

Bank Central Asia declined 0.6 percent to Rp 7,950 while automaker Astra International declined 0.7 percent to Rp 76,200.

— Bangkok edged down 0.75 percent, or 7.80 points, to 1,037.01.

Banpu fell 1.75 percent to 562 baht, while Siam Cement dropped 0.93 percent to 318 baht.