Asian shares down on US, European default fears

HONG KONG—Most Asian stocks followed global markets downwards on Tuesday as the eurozone debt crisis rumbled on while lawmakers in Washington remained deadlocked on an agreement to avoid a US default.

Gold remained at record highs amid general risk-aversion at a time of economic uncertainty.

Tokyo closed 0.85 percent, or 84.75 points, lower at 9,889.72 and Shanghai lost 0.70 percent, or 19.71 points, to end at 2,796.98.

Seoul ended flat, edging down 0.27 points to 2,130.21 and Sydney was also flat, losing 3.9 points to 4,468.1.

However, Hong Kong staged a late rally thanks to bargain-hunting, ending 0.45 percent higher. The Hang Seng Index closed 97.65 points up at 21,902.40.

The broad sell-off followed losses in London, Frankfurt and Paris on Monday.

On Wall Street the Dow gave up 0.76 percent, the S&P 500 dropped 0.81 percent and the Nasdaq slid 0.89 percent.

In early trade on Tuesday the three main European bourses were higher on mild bargain-hunting.

But traders were still nervous ahead of an emergency summit on Thursday aimed at thrashing out a second bailout for Greece that would help it avoid a default and prevent debt problems from spreading to other economies such as Italy and Spain.

Investors are concerned about a possible financial crisis despite European Banking Authority stress tests Friday showing only eight out of 91 lenders were unable to show they had sufficient defenses against a financial shock.

Critics said the results did little to reassure since the reviews did not include a possible sovereign debt default – the most crucial issue.

Adding to market pressure is the impasse in the United States where the White House and Republicans are running out of time to strike a deficit-cutting deal that will allow the debt ceiling to be raised and avoid default.

Treasury Secretary Tim Geithner said progress was being made but warned of the devastating consequences of failure.

A US debt default “would bring the world economy… because of the critical role we play in the global economy, to the edge of recession again. And again, it’s not an option we can consider,” he said.

Republicans, whose votes President Barack Obama needs to raise the limit, have demanded sweeping spending cuts in return while rejecting calls from the White House and Democrats to tie them to tax hikes on the rich and corporations.

The euro edged up to $1.4154 in early European trade from $1.4117 in New York late Monday. The European single unit firmed to 111.77 yen from 111.50 yen. The dollar fetched 79.01 yen, little changed from 79.02 yen.

Gold closed at $1,608-$1,609 an ounce in Hong Kong, up from Monday’s close of $1,598-$1,599.

The precious metal passed the $1,600 barrier in London on Monday as dealers bought it for its safe-haven status.

In Sydney, Rupert Murdoch’s News Corporation ended 2.40 percent higher on bargain-hunting after suffering a heavy sell-off of around 20 percent since a phone hacking scandal at one of its British newspapers broke this month.

The gains came amid reports that Murdoch is planning to step down as chief executive and despite a warning by Standard & Poor’s that the company’s credit rating could be cut.

The media giant has been battered by the phone-hacking scandal surrounding the now-defunct News of the World, which has seen the resignation of key Murdoch associates and two of Britain’s top policemen.

New York’s main contract, West Texas Intermediate for delivery in August, gained 25 cents to $96.18 per barrel in the afternoon. Brent North Sea crude for September added 19 cents to $116.24.

In other markets:

— Singapore closed up 0.56 percent, or 17.17 points, at 3,096.12.

Sembcorp Industries rose 0.81 percent to Sg$4.99 and United Overseas Bank gained 0.41 percent to Sg$19.68.

— Taipei ended 0.16 percent, or 14 points, lower at 8,524.57.

Taiwan Semiconductor Manufacturing Co fell 1.72 percent at Tw$68.5 while leading smartphone maker HTC was 2.53 percent higher at Tw$893.

— Manila rose 0.22 percent, or 9.64 points, to 4,485.65.

The market is at a record high as miners were boosted by the surging price of gold.

Lepanto Consolidated Mining’s A shares surged 7.41 percent to 1.16 pesos while Philex Mining jumped 4.4 percent to 27.10 pesos.

Metropolitan Bank added 0.57 percent to 78.95 pesos but top-traded Banco de Oro fell 0.25 percent to 58.85 pesos.

— Wellington closed 0.18 percent, or 6.14 points, higher at 3,392.02.

Fletcher Building ended up 0.5 percent at NZ$8.04 and Telecom rose 1.8 percent to NZ$2.54 but electricity and gas distributor Vector fell 4.4 percent to NZ$2.42 and New Zealand stock exchange operator NZX Ltd. dived 4.5 percent to NZ$2.12.

— Kuala Lumpur fell 0.44 percent, or 6.94 points, to 1,555.64.

Gaming giant Genting Malaysia fell 2.2 percent to 3.62 ringgit and Petronas Gas lost 1.5 percent to 13.40 ringgit. Shipping company MISC gained 1.4 percent to 7.82 ringgit.

— Jakarta fell 0.24 percent, or 9.55 points, to 4,023.42.

Tin miner Timah fell 3.9 percent to 2,500 rupiah, Bank Mandiri lost 2.6 percent to 7,650 rupiah and car maker Astra fell 1.5 percent to 71,500 rupiah.

— Bangkok rose 1.18 percent, or 12.83 points, to 1,096.77.

Banpu added 2 baht to 738, while PTT gained 2 baht to 340.

— Mumbai rose 0.79 percent, or 146.83 points, to 18,653.87.

India’s top property firm DLF climbed 2.09 percent to 239.85 rupees while the largest bank State Bank of India gained 1.59 percent to 2,511.6.