Tue, Sep 13, 2011 page12

• Asia shares tumble on Greek debt fears

  DIVING’S THE WORD: While Taipei trading was closed for a holiday yesterday, Asian markets dropped as the G7 admitted fixing economic problems would be complex

  • AFP and AP, HONG KONG, LONDON and DHAKA
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  Asian stock markets slumped while the euro dived to a 10-year low against the yen yesterday, as concerns grew that Greece would default on its debt repayments.

  Big losses in Europe and on Wall Street on Friday fueled the selling pressure, while the resignation of a key European Central Bank committee member also depressed sentiment.

  Tokyo fell 2.31 percent, or 201.99 points, to a 29-month-low of 8,535.67, with exporters again feeling the most pain as the euro sank against the yen.

  The euro’s weakness also weighed on other markets, with Hong Kong tumbling 4.21 percent, or 836.09 points, to 19,030.54, and Sydney ending 3.72 percent, or 156.2 points, lower at 4,038.5.

  Singapore ended 2.89 percent, or 81.52 points, lower at 2,743.58.

  Taipei, Seoul and Shanghai were closed for public holidays.

  In early Europe trading, shares tumbled after Tokyo struck its lowest close in 29 months, as the G7 admitted that current economic problems were so complex that a unified response was impossible.

  The Organisation for Economic Co-operation and Development, only days after warning of potential pockets of recession, said its composite index of leading indicators signaled a slowdown in most of its 34 member countries.

  Banking shares dived yesterday on concern that Moody’s credit rating agency might downgrade their ratings because of the amount of Greek debt bonds they hold.

  “The intensifying sell-off in both the euro and risk assets in general reflects heightened investor fear that Greece is on the verge of defaulting which could plunge the weak global economy back into another Lehman-esque recession,” said Lee Hardman, currency economist at the Bank of Tokyo-Mitsubishi UFJ. “Hopes for coordinated action from the G7 finance ministers over the weekend to restore confidence to financial system predictably fell short of expectations.”

  At midday, Paris’ CAC 40 Index slumped 3.73 percent, Frankfurt’s DAX 30 dived 2.66 percent and London’s benchmark FTSE 100 lost 1.8 percent.

  The euro dived to ￥103.90 — the lowest level since 2001. It later pulled back to ￥104.62, compared with ￥107.66 on Friday.

  Europe’s single currency dropped as low as US$1.3495 — the lowest point since February — before recovering to US$1.36.

  The flight to safety drove down yield on 10-year bonds issued by Germany and the US to historic low levels.

  “It’s very clear to us that this situation in Europe is not going to end well and the now-plummeting euro is trying to tell you that some sort of Greek default and subsequent European bank recapitalization program is imminent,” Bell Potter managing director Charlie Aitken said in Sydney.

  Satoshi Tate, a senior dealer at Mizuho Corporate Bank, told Dow Jones Newswires: “We are watching Greece and only Greece.”

  Oil also suffered heavy selling. New York’s main contract, light sweet crude for delivery in October, dived US$1.71 to US$85.53 per barrel in the afternoon.

  Brent North Sea crude fell US$1.17 to US$111.60.

  Gold was trading at US$1,841.20 an ounce at 8am yesterday, down from US$1,874.40 in late trade on Friday.

  In other Asian markets, Manila ended 1.15 percent, or 50.02 points, lower at 4,296.05; Wellington closed 1.81 percent, or 60.12 points, lower at 3,263.81; Jakarta fell 2.56 percent, or 102.38 points, to 3,896.12; Kuala Lumpur fell 1.56 percent, or 22.86 points, to 1,446.26; Bangkok fell 2.03 percent, or 21.54 points, to 1,040.83; and Indian shares slid 2.17 percent, or 365.23 points, to 16,501.74.

  Meanwhile, hundreds of small investors took to the streets in the Bangladeshi capital of Dhaka to protest a steep fall at the Dhaka Stock Exchange.

  The Dhaka Stock Exchange’s benchmark index fell 124 points hours after the session opened at 6,017.96, sparking protests by investors who squatted on the streets and blocked traffic in Dhaka’s central commercial district where the trading house is located.

  The country’s benchmark index has steadily dropped since it opened for trading after a long vacation on Sept. 4.
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