Asian stocks down on Greek debt worries

HONG KONG – Asian markets fell Thursday, tracking losses on Wall Street as doubts mounted over whether the eurozone would approve a bailout for debt-stricken Greece as it races to avoid a default.

Following a strong regional rally on Wednesday, Australian shares lost 1.83 percent in morning trade, despite an upbeat jobs report, with Qantas saying it plans to chop at least 500 jobs after an 83.0 percent half-year profit drop.

Tokyo and Hong Kong dipped 0.26 percent and 0.73 percent respectively, after hitting six-month highs a day earlier, while Seoul lost 1.13 percent. Shanghai shares were flat, off 0.02 percent in morning trade.

Fresh worries over the eurozone’s fiscal woes weighed as the 17-nation currency bloc told Greece it must accept tough European Union surveillance if it is to unlock a stalled bailout next week and avoid a messy default.

Greek lawmakers approved a package of severe austerity measures late Sunday, but Eurogroup chair Jean-Claude Juncker has said that he has not received the “political assurances” from Greece necessary to green light the rescue fund.

The delay has heightened tensions with Athens facing a 14.5-billion-euro ($18.9 billion) bond repayment deadline on March 20.

“Suffice to say if ‘Greece’ appears in a headline, the knee-jerk reaction is to sell risk and try to figure things out later,” David Watt, senior currency strategist at RBC Capital Markets, said in a note, according to Dow Jones Newswires.

Adding to worries over Europe, data release Wednesday showed the eurozone economy shrunk by 0.3 percent in the fourth quarter, and Germany’s economy contracted 0.2 percent, raising the spectre of recession in this quarter.

Asia’s market rally on Wednesday was helped by comments from China’s premier and the head of its central bank, signaling Beijing may unlock its massive foreign-exchange reserves to help the continent, its biggest export market.

Wall Street ended down on Wednesday, with the Dow Jones Industrial Average losing 0.76 percent, the broad-based S&P 500 dipping 0.54 percent, while the tech-heavy Nasdaq Composite shed 0.55 percent.

The drop, which analysts said was largely driven by worries over European debt, came even as the US Federal Reserve said industrial production rose 0.7 percent in January from December.

Better-than-expected Australian jobs data boosted the Australian dollar, which rallied to US$1.0783 from US$1.0681 before the report, but disappointing earnings from banking giant Westpac and Qantas kept the market down.

Australia on Thursday posted a surprise drop in its unemployment rate to 5.1 percent with 46,300 jobs created in January – quadruple earlier forecasts.

In Tokyo, reports said Tsuyoshi Kikukawa, the former president of scandal-wracked Olympus, had been arrested over the camera and medical equipment maker’s financial cover-up — a scandal that hammered its shares.

At least two other former executives were arrested on suspicion of falsifying the company’s financial results, the reports said.

On currency markets, the euro bought $1.3021 and 102.06 yen in Tokyo morning trade, down from $1.3065 and 102.47 yen in New York late Wednesday.

The dollar traded at 78.38 yen against 78.43 yen in New York.

New York’s main oil contract, West Texas Intermediate (WTI) light sweet crude for March delivery, fell 15 cents to $101.65 per barrel and Brent North Sea crude for April delivery shed 32 cents to $118.61.

Gold was at $1,721.67 an ounce at 0320 GMT, against $1,728.10 in New York.