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Asian stocks sink on Europe debt crisis setbacks

Dunya News

European economic woes hit the Asian stocks as efforts to contain it seem failing.

Setbacks in Europes efforts to isolate a debt crisis before it engulfs Italy or blows up into an all-out recession sent Asian stock markets tumbling Thursday.Benchmark oil hovered around $95 per barrel and the dollar fell against the euro and the yen.Japans Nikkei 225 index fell 2.8 percent to 8,505.79 and Hong Kongs Hang Seng dived 4.5 percent to 19,117.51. South Koreas Kospi slid 3.7 percent to 1,836.68 and Australias S&P/ASX 200 lost 2.4 percent to 4,241.The losses in Asia tracked those in New York, where the Dow Jones industrial average fell almost 400 points, its worst decline since Sept. 22.Global stock markets were rattled after Italys main borrowing rate blew past 7 percent putting the country at the front and center of a debt crisis that had until recently focused mainly on Greece. The 7 percent figure is considered an important level because Greece, Portugal and Ireland required bailouts from other nations when interest rates on their bonds hit that mark.As the third-largest economy in Europe, Italys $2.6 trillion debt is considered too large for other European countries to absorb. A default could lead to the disintegration of the euro currency used by 17 nations or a debilitating recession.Derek Cheung, chief investment officer at Deutron INV Partners Ltd. in Hong Kong said the absence of stock buyers looking for bargains as losses accumulated throughout the day was a sign of investor pessimism, at least in the near term.Theres no bottom-fishing. That kind of surprised me, he said. That means people may expect this kind of correction to last for more than one day.Investors were further unnerved after government talks in Greece aimed at avoiding a default on its massive debts broke down. Markets fear that a Greek default would lead to huge losses for European banks and potentially to a global lending freeze similar to what happened after Lehman Brothers fell in 2008.Greece has survived since May 2010 on a €110 billion ($150 billion) rescue loan package but needs another huge injection of funds to prevent a massive default on its debt.Energy and resource shares were hurt by fears that the financial turmoil could drag down world economic growth. Hong Kong-listed China National Offshore Oil Corp., or CNOOC, fell 4.9 percent. Japanese energy explorer Inpex Corp. dropped 5.3 percent. Australias Fortescue Metals Group lost 8 percent.High-tech stocks and heavy industry also got hammered. Japans Elpida Memory Inc. tumbled 10.7 percent and Hitachi Construction Machinery lost 5.6 percent. South Koreas Hynix Semiconductor, the worlds second-largest memory chip maker, lost 5 percent, while shipyard Hyundai Heavy Industries fell 6.4 percent.Hong Kong-listed Industrial & Commercial Bank of China plunged 7.9 percent on reports that Goldman Sachs was selling a significant stake in the worlds largest bank by market value. Bank of China lost 4.9 percent and Agricultural Bank of China, Chinas biggest rural lender, fell 5.5 percent.Chinese Internet and mobile company Tencent Holdings fell 3 percent after its quarterly earnings fell short of estimates and analysts worried that investments in video, microblogs and e-commerce would put pressure on profits into the medium term.Australias Orica Ltd., the worlds largest explosives maker, dropped 3.4 percent after the company was ordered to shut down one of its plants following chemical leaks.The Dow finished down 389.24 points, at 11,780.94, its worst decline since Sept. 22. The S&P 500, the broadest major stock index, closed down 3.7 percent, or 46.82 points, at 1,229.10 its worst day since Aug. 18. The Nasdaq composite index lost 3.9 percent at 2,621.65.European stock markets fell sharply, too. The main stock index in Italy finished the day down 3.8 percent. The DAX index in Germany and the CAC-40 in France each declined 2.2 percent.Benchmark crude for December delivery was down 15 cents at $95.59 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.06 to settle at $95.74 in New York on Wednesday.In currencies, the euro rose to $1.3546 from $1.3540 in late trading Wednesday in New York. The dollar slipped to 77.69 yen from 77.85 yen.
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