Asian shares, euro slip on eurozone fears
A man speaks on a mobile phone in front of an electronic stock indicator in Tokyo Wednesday, May 23, 2012. Japan's Nikkei 225 index fell 1.98 percent to 8,556.60 as a report that Greece is considering preparations to leave the euro common currency sent Asian stock markets lower Wednesday. AP PHOTO/SHIZUO KAMBAYASHI
HONG KONG—Asian markets reversed the previous day’s gains and the euro sank back toward four-month lows Wednesday after Greece’s former premier warned there was a chance his country will exit the eurozone.
Lucas Papademos’ comments came ahead of a European summit aimed at addressing Athens’ debt crisis and tempered optimism after France and Germany said they would do whatever it takes to keep Greece in the bloc.
Wall Street provided an anemic lead despite strong US housing data indicating a turnaround in the crucial sector, while a downgrade of Japan debt rating late Tuesday also weighed.
Tokyo tumbled 1.98 percent, or 172.69 points, to end at 8,556.60, Seoul fell 1.10 percent, or 20.07 points, to 1,808.62 while Sydney slumped 1.31 percent to close 54.0 points weaker at 4,067.0.
Hong Kong closed 1.33 percent, or 252.96 points lower at 18,786.19 and Shanghai fell 0.42 percent, or 9.87 points, to 2,363.44.
European leaders will later in the day meet in Brussels to discuss solutions to the Greek crisis as the country prepares to hold a second general election on June 17.
Analysts fear a likely victory for anti-austerity parties will see Athens renege on its bailout terms and eventually leave the euro, which could have a knock-on effect for other troubled economies such as Spain and Italy.
Papademos, who stepped down this month, said in an interview with Dow Jones Newswires published Tuesday: “The risk of Greece leaving the euro is real.”
He added that preparations were being made in case Greece exits the 17-nation currency union.
There were also concerns over Wednesday’s summit after Germany reasserted its stance against eurobonds – which would see nations guarantee each other’s borrowings – despite calls from other members and the International Monetary Fund to look at the plan.
Meanwhile, the Organization for Economic Development and Cooperation lowered its outlook for the eurozone to a 0.1 percent contraction, urging more easing of monetary policy and euro-wide measures to boost growth.
“The crisis in the euro area has become more serious recently, and it remains the most important source of risk to the global economy,” OECD chief economist Pier Carlo Padoan warned.
The euro lost ground against the dollar and yen in Asian trade.
The euro fetched $1.2650 and 100.50 yen in Tokyo afternoon trade, lower than $1.2684 and 101.45 yen in New York late Tuesday.
The dollar slipped to 79.44 yen from 79.98 yen.
Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo, said: “I personally don’t think much will come out of the EU Summit that will drastically alter the situation in Greece or Spain.”
In Japan traders were also absorbing Fitch’s announcement it had cut the country’s credit rating by two notches, and giving it a negative outlook, blaming “leisurely” efforts at shrinking its massive public debt.
The move follows similar downgrades by rival agencies Moody’s and Standard & Poor’s in the past year and a half.
And on Wednesday Tokyo posted a bigger-than-expected trade deficit of 520.3 billion yen ($6.5 billion) in April due to higher energy costs.
The deficit was larger than a shortfall of 477.7 billion yen registered in April 2011, a month after Japan was hit by a huge earthquake and tsunami.
On Wall Street the Dow and the S&P 500 index both ended flat despite getting an early fillip from news that existing US home sales rose 3.4 percent in April while prices continued to rise.
The tech-heavy Nasdaq lost 0.29 percent as investors dumped Facebook shares for a second straight day.
The social networking site has now tumbled 18.0 percent since its debut on Friday amid accusations that leading underwriters cut their projections days ahead of the initial public offering.
Oil prices eased. New York’s main contract, West Texas Intermediate crude for delivery in July, was down 79 cents at $91.06 per barrel while Brent North Sea crude for the same month shed $1.07 to $107.72 in late afternoon trades.
Gold was $1,556.25 an ounce at 1035 GMT, compared to $1,577.80 late Tuesday.
In other markets:
— Taipei fell 127.14 points, or 1.75 percent at 7,147.75.
Taiwan Semiconductor Manufacturing Co. dived 3.77 percent at Tw$79.1 while leading smartphone maker HTC was 2.09 percent lower at Tw$422.5.
— Manila closed 0.60 percent, or 29.90 points, down at 4,928.53.
SM Investments dropped 1.18 percent to 669.50 pesos and Philippine Long Distance Telephone fell 0.42 percent to 2,382 pesos.
— Wellington closed 0.56 percent, or 19.66 points, lower at 3,510.20.
Telecom Corp. was off 2.46 percent at NZ$2.575 and Fletcher Building was down 1.25 percent at NZ$6.30.
— Singapore closed down 1.53 percent, or 43.33 points, to 2,780.42.
Wilmar International fell 4.04 percent to 3.80 and Singapore Telecommunications shed 0.96 percent to 3.10.
— Kuala Lumpur shares ended 0.46 percent, or 7.13 points, lower at 1539.71.
Genting lost 2.3 percent to 10.02 ringgit, British American Tobacco eased 2.0 percent to 51.74 and MMC Corp shed 1.5 percent to 2.66.
— Bangkok fell 1.84 percent, or 20.82 points, to 1,110.70.
Banpu added 0.43 percent to 464 baht, while Siam lost 1.52 points to 135.50 baht.
— Jakarta closed down 0.98 percent, or 39.52 points, to 3,981.57.
Car maker Astra International declined 1.6 percent to 67,750 rupiah and Bank Mandiri fell 1.4 percent to 7,050 rupiah.
— Mumbai slid 78.31 points, or 0.49 percent, to 15,948.10.
India’s biggest mobile phone firm Bharti Airtel fell 4.29 percent to 281.95 rupees while private steel maker Jindal Steel slid 1.84 percent to 452.95.
