Concerns over Europe’s debt crisis deepened as the ratings of 16 Spanish banks were cut after the country slipped into recession, while Greece was also downgraded on fears it could exit the eurozone.
Asian markets tumbled yesterday and the euro faced more pressure as traders shifted out of riskier assets on expectations that another Greek election next month would be won by anti-austerity parties.
Tokyo tumbled 2.99 percent, or 265.28 points, to 8,611.31, while Seoul plummeted 3.4 percent, or 62.78 points, to 1,782.46 and Sydney dived 2.67 percent, or 110.9 points, to 4,046.5, its biggest fall in eight months.
Europe’s main stock markets sank in opening deals yesterday. London’s benchmark FTSE 100 index dropped 0.92 percent to 5,289.37 points, Frankfurt’s DAX 30 lost 0.86 percent to 6,254.82 points and in Paris, the CAC 40 shed 1.03 percent to 2,980.86.
Madrid’s IBEX-35 index of top shares tumbled 2.28 percent to 6,388.8, with banking stocks falling moderately after the downgrade.
On currency markets, the euro stood at ￥100.33 in Tokyo in afternoon trade, the unit’s weakest level since early February, and slightly lower than ￥100.65 in New York. It was above the ￥102 level on Thursday.
The single currency also lost ground against the US dollar, slipping to US$1.2657 from US$1.2693 in New York.
A caretaker government took office in Athens on Thursday to organize its second election in six weeks after an inconclusive May 6 vote.
Fitch Ratings downgraded Greece’s credit a notch, to “CCC” from “B-,” saying it was vulnerable to default amid political uncertainty over Athens’ commitment to the crucial bailout plan.
The IMF said on Thursday it would hold off on official contacts with Greece until after the June 17 elections, warning no new funds would be released from the 240 billion euro (US$305 billion) bailout if progress on pledged reforms and tough austerity measures faltered.
In Spain, Moody’s slashed the ratings of 16 banks by between one and three notches, citing “renewed recession, the ongoing real-estate crisis and persistent high levels of unemployment.”
It also blamed the reduced creditworthiness of the government.
The move came just over a week after the government intervened to prop up the fourth-largest bank Bankia by taking a 45 percent stake.
The Spanish government paid higher rates to place three and four-year bonds with wary investors on Thursday, while Bankia was reportedly hit by heavy withdrawals by clients.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
The US House of Representatives yesterday unanimously passed the Taiwan Conflict Deterrence Act, which aims to disincentivize Chinese aggression toward Taiwan by cutting Chinese leaders and their family members off from the US financial system if Beijing acts against Taiwan. The bipartisan bill, which would also publish the assets of top Chinese leaders, was cosponsored by Republican US Representative French Hill, Democratic US Representative Brad Sherman and seven others. If the US president determines that a threat against Taiwan exists, the bill would require the US Department of the Treasury to report to Congress on funds held by certain members of the
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