Asian markets, euro hit on Greece debt woes

A man looks at an electronic stock indicator in Tokyo Tuesday, May 15, 2012. Asian stock markets were mostly lower Tuesday, rattled by a political impasse in Greece that could lead the debt-stricken country to a destabilizing exit from the euro currency union. Japan's Nikkei 225 index fell 73.10 points, or 0.81 percent, to close at 8,900.74, a new three-month low. AP/SHIZUO KAMBAYASHI

HONG KONG—Asian shares mostly fell while the euro hit a four-month low on Tuesday amid growing concern about Greece’s eurozone future as talks on forming a government remain deadlocked.

Dealers are also keeping an eye on Spain as the country’s banking sector comes under huge pressure while Italy saw the ratings of 26 of its lenders downgraded amid fears over their exposure to the region’s debt crisis.

Tokyo closed 0.81 percent, or 73.10 points, lower at 8,900.74 while Sydney fell 0.71 percent, or 30.7 points, to 4,266.3 and Seoul shed 0.77 percent, easing 14.77 points to 1,898.96.

Shanghai was down 0.25 percent, or 5.88 points, to end at 2,374.84 but Hong Kong was up 0.81 percent, or 159.27 points, at 19,894.31 as it rebounded from eight successive losses.

The losses were in line with Wall Street, which has also been infected by eurozone fear. The Dow fell 0.98 percent, the S&P 500 dropped 1.11 percent and the Nasdaq slipped 1.06 percent.

Greece’s politicians have for the past week failed to come to agree on a coalition government after May 6 polls saw 70 percent of the electorate vote against the ruling parties, which introduced austerity measures needed to qualify for bail-out cash.

The heads of the main groups, including the anti-cuts radical left Syriza party, are set to meet later Tuesday for talks on forming a technocratic government.

Another failure to reach agreement will see fresh elections next month that observers suggest would see a better turnout for Syriza, which came second in the election and which has said it will tear up a deal Athens struck with creditors for last year’s bailout.

Such a scenario would see Greece default on its huge debt servicing and its eventual exit from the eurozone, a scenario many say is increasingly possible, with top officials seemingly acknowledging so.

European Commission president Jose Manuel Barroso said Greece should “leave the euro if it fails to respect the strict rules it agreed to.

“I have a lot of respect for Greek democracy … but I also have to respect the other 16 parliaments,” he said in an interview with Italian news channel SkyTG24.

“Markets are aggressively pricing in a messy Greek default and a potential exit from the eurozone,” Stan Shamu, market strategist at IG Markets, told Dow Jones Newswires.

Adding to the continent’s crisis is concern over Spain’s banking sector, which has been ravaged by bad loans, leading European finance ministers to call on Madrid to “speed up” work on reforms.

Falling confidence in Spain, where one in four people is jobless, saw yields on its benchmark 10-year bonds rise above the crucial 6.0 percent level.

And in Italy Moody’s said Monday it had slashed its credit ratings by up to four notches for 26 banks, citing their vulnerability to the country’s recession and trouble in the eurozone.

It said the move made the ratings for Italian banks among the lowest within advanced European countries.

The euro hit a four-month low because of the growing crisis over Greece’s future in the eurozone but edged back slightly later on.

In early European trade, the single currency stood at $1.2847 and 102.67 yen, slightly up from $1.2823 and 102.37 yen in New York Monday. It slid to $1.2816 at one point in Asia Tuesday, its lowest since mid-January.

The dollar was at 79.90 yen, up slightly from 79.84 in New York.

On oil markets New York’s main contract, West Texas Intermediate (WTI) crude for delivery in June was up five cents at $94.83 per barrel while Brent North Sea crude for June shed 43 cents to $111.10 in the late afternoon.

Gold was at $1,558.71 at 1030 GMT, compared with $1,562.76 late Monday.

In other markets:

— Wellington closed 0.57 percent, or 20.44 points, lower at 3,534.92.

Telecom fell 2.28 percent to NZ$2.57, Fletcher Building edged up 0.32 percent to NZ$6.28 and Contact Energy gained 0.41 percent to NZ$4.84.

— Manila tumbled 2.09 percent, or 106.17 points, to 4,977.45.

Philippine Long Distance Telephone fell 2.20 percent to 2,396 pesos, DMCI Holdings shed 0.90 percent to 60.80 pesos and Security Bank plunged 6.08 percent to 125.10 pesos.

— Taipei rose 18.46 points, or 0.25 percent, to 7,395.64.

HTC added 2.53 percent to Tw$440.0 while Hon Hai Precision shed 1.73 percent to Tw$85.4.

— Kuala Lumpur shares ended 0.89 percent lower, or 14.01 points, at 1,561.07.

CIMB Group lost 2.3 percent to 7.32 ringgit, Malayan Banking eased 1.2 percent to 8.63 and Axiata Group shed 0.4 percent to 5.37.

— Singapore closed up 0.58 percent, or 16.73 points, to 2,880.85.

Palm oil producer Wilmar International gained 0.75 percent to Sg$4.05 while DBS Bank was up 0.66 percent at Sg$13.77.

— Bangkok rose 1.63 percent, or 19.04 points, to 1,184.55.

PTT added 1.52 percent to 335 baht, while Banpu gained 1.16 percent to 522 baht.

— Jakarta closed down 0.18 percent, or 7.42 points, at 4,045.64.

Nickel miner Vale Indonesia fell 2.8 percent to 2,575 rupiah while coal miner Bumi lost 3.3 percent to 1,780 rupiah.

— Mumbai rose 112.41 points, or 0.47 percent, to 16,328.25.

Engineering firm Larsen and Toubro rose 5.41 percent to 1,222.5 rupees while India’s second-largest software outsourcer Infosys rose 3.13 percent to 2,411.2.