Asian markets fall after European downgrades

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Asian markets fall after European downgrades

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Asian markets fell after S&P's cut the rating of nine European nations including France.

16 January,2012 09:27 am

The news brought the eurozone debt crisis back to the forefront as traders look ahead to a crucial week in the region as Greece struggles to come to an agreement with creditors over its repayments, raising fears it could default.Tokyo was 1.53 percent lower, Hong Kong lost 1.00 percent, Sydney slipped 1.17 percent, Shanghai gave up 0.68 percent, Seoul shed 1.34 percent.Taipei also fell, losing 1.09 percent despite Beijing-friendly President Ma Ying-jeou being handed a second term in weekend elections, a result that came as a relief to the United States and China.S&P on Friday cut Frances and Austrias top AAA rating by one notch to AA with a negative outlook, citing European leaders inability to come up with a solid plan to tackle the two-year-old crisis.It also downgraded under-pressure Italy and Spain, which have already seen the interest on its bonds hit dangerously high levels.Overall nine countries had their ratings cut while seven had theirs affirmed. Greece was excluded. The agency warned last month before a European summit aimed at hammering out a solution that it was putting the eurozone on review for downgrade, adding that it would take the outcome of the talks into mind.The downgrades were widely anticipated and already priced (in), Ric Spooner, chief market analyst at CMC Markets said in a note.However, they set a nervous early tone for this weeks markets as we approach more significant hurdles in the evolution of the eurozone crisis, he added, according to Dow Jones Newswires.Eyes will now be on Greece this week as it holds talks with private banks over writing down part of its debt, which is considered vital to avoid a messy default.Prime Minister Lucas Papademos said his country faced acute economic dangers without the writedown deal, which would wipe off 100 billion euros ($127 billion) from Greeces massive debt burden and help unlock further international bailout aid.However, talks at the weekend stalled, raising the prospect that Greece could plunge out of the eurozone with dire results for the region and the global economy.The euro plummeted more than two US cents on Friday after the S&P announcement, hitting $1.2624 in New York late Friday, its lowest since August 2010.In early Tokyo trade the common unit bought $1.2652, while it was also at 97.26 yen compared with 97.20 in New York.Gold was at $1,635.50 an ounce at 0210 GMT, against $1,642.25 late Friday.