Thu, May 17, 2012 - Page 10 News List

Asian markets tumble on eurozone fears

CONTAGION:Financial markets are facing an eerie feeling of ‘having been here before,’ and now fear that the euro itself is at stake as its credibility is increasingly challenged

AFP, HONG KONG

An official at the Tokyo Stock Exchange checks monitors in the afternoon session in Tokyo yesterday.

Photo: EPA

Asian markets fell yesterday and the euro dived to a new four-month low on news Greece is set to go to the polls again after talks to form a coalition failed, stoking fears it will exit the eurozone.

The developments came as new pro-growth French President Francois Hollande held his first talks with German Chancellor Angela Merkel, the main proponent of austerity, to find common ground on tackling the crisis.

Tokyo fell 1.12 percent, or 99.57 points, to 8,801.17, while Sydney was 2.36 percent, or 100.8 points, lower at 4,165.5. Seoul closed 3.08 percent lower, easing 58.43 points to 1,840.53. Hong Kong slumped 3.19 percent, or 634.48 points, to 19,259.83, while Shanghai was down 1.21 percent, or 28.65 points, at 2,346.19.

Greece must hold fresh -elections after talks on forming a new government broke up without agreement on Tuesday, prolonging a tortuous crisis.

The precarious financial situation was also highlighted when Greek President Carolos Papoulias said about 700 million euros (US$894 million) had been withdrawn from Greek banks on Monday and he warned the situation could worsen in the coming days.

Adding to the pessimism were comments from German Minister of Finance Wolfgang Schaeuble, who said it was not possible to renegotiate an international aid plan for Greece.

Currency traders reacted badly, sending the euro tumbling to US$1.2686, its lowest level since Jan. 16, compared with US$1.2728 in New York late on Tuesday as they jumped out of risky assets.

The common currency also eased to a three-month low against the yen at ¥101.96, compared with ¥102.12, while the US dollar was changing hands at ¥80.40, from ¥80.37.

“There is a pervading sense of unease in financial markets, a disquieting feeling of having been in something like this position before and wondering if it might turn out the same,” National Australia Bank said in a note yesterday. “In Greece, there are increasing outflows from its own banking sector and broader discussion of contagion effects. The concern now is regarding contagion. It’s not Greece per se that is the problem, but the credibility of the euro as a currency.”

In early European trade yesterday, major stock markets slid at the open.

London’s benchmark FTSE-100 dropped 1.15 percent to 5,374.84 points, Frankfurt’s DAX 30 lost 0.87 percent to 6,344.92 points and in Paris the CAC 40 shed 0.77 -percent to 3,017.42.

The interest rate on Spanish bonds jumped to 6.495 percent, while Italian bonds approached the psychologically key 6 percent mark, at 5.946 percent.

On oil markets, New York’s main contract, West Texas -Intermediate crude for delivery in June, was down US$1.58 to US$92.40 a barrel, while Brent North Sea crude for June shed US$2.06 to US$110.18 in late afternoon trade.

Gold was at US$1,535.30 an ounce at 9am yesterday in London, compared with US$1,558.71 late on Tuesday.

This story has been viewed 1782 times.
TOP top