Asian shares lower as Europe fears grow
Asian markets fell for a third straight day and the euro sat near
11-month lows Thursday on growing doubts over last week's European debt
deal as Germany warned the crisis would last for years.
Data in Japan highlighted the impact of the European crisis on the
country's economy as the closely watched Tankan survey showed most
manufacturers were pessimistic about the future.
Tokyo shed 1.66 percent, or 141.76 points, to close at 8,377.37 and
Sydney fell 1.21 percent, or 50.7 points, to 4,139.8 while Seoul shed
2.08 percent, or 38.64 points, to end at 1,819.11.
Hong Kong fell 1.78 percent, or 327.59 points, to 18,026.84 and
Shanghai lost 2.14 percent, or 47.63 points, to 2,180.90.
German Chancellor Angela Merkel added to the already weak sentiment
when she told parliament: "Getting over the state debt crisis is... a
process. This process won't last weeks, it won't last months, it will
last years."
Although she said the region would overcome its problems, investors
remained risk-averse.
On Wednesday Rome's five year bonds hit a euro-era record and in
early trade Thursday the yield on 10-year bonds rose above the seven
percent level considered unsustainable for nations to service their
debts.
"The jitters are turning stronger again," said Mirae Asset Securities
analyst Lee Jin-Woo in Seoul.
"Judging from the rising yield for Italy's government bonds, the
markets haven't found confidence even after the European summit," Lee
told Dow Jones Newswires.
European Union leaders from 26 of the 27 member states agreed at a
high-stakes Brussels summit last week to back a Franco-German drive for
tighter budget policing in a bid to save the eurozone.
After Britain, which does not use the euro, blocked changes to an EU-wide
treaty, the other 26 EU states signalled their willingness to join a
"new fiscal compact" imposing tougher budget rules.
However, the summit's plans for a $200 billion boost to the
International Monetary Fund were thrown into doubt when Germany said it
would not provide any extra cash if other non-euro member nations,
including Britain and the United States, did not contribute.
Meanwhile Standard & Poor's is expected to decide soon whether or not
to downgrade 15 of the 17 eurozone members after putting them on warning
last week.
And rival agency Moody's has said the crisis talks failed to produce
"decisive policy measures", saying it would review the credit ratings of
all EU states within the next three months.
The euro remained under pressure after falling below the $1.30 level
in New York overnight.
The common currency fetched $1.2967 in early European trade, compared
with $1.2981 late Wednesday in New York.
The unit is sitting at its lowest levels since January. It bought
101.10 yen from 101.26 yen. AFP |