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Asian markets fall on eurozone, US fears

Asian markets fell today on lingering eurozone debt fears and following losses on Wall Street as the Federal Reserve warned that the US economy was still weak.

sports Updated: Oct 20, 2011 08:52 IST
Hong Kong,asian markets,European Union

Asian markets fell on Thursday on lingering eurozone debt fears and following losses on Wall Street as the Federal Reserve warned that the US economy was still weak.

As traders nervously awaited a weekend summit of European Union leaders, there were concerns that a plan to deal with the region's crisis would not be far-reaching enough.

Tokyo shed 0.91 percent by the break, Hong Kong tumbled 1.39%, Sydney fell 1.55%, Shanghai lost 0.45% and Seoul was 0.18% off.

Many investors have stayed away from the markets, unsure about the future of the eurozone due to what they consider weak leadership.

An announcement last week from France and Germany that they had a plan to address the debt problem sent global shares soaring but traders have become cautious as details have been lacking and EU officials have given conflicting messages.

A report by Britain's The Guardian newspaper saying France and Germany had agreed to more than quadruple the European Financial Stability Facility sent shares higher on Wednesday.

But by the end of the day doubts set in as reports emerged that the EFSF was still being discussed.

"Generally markets are still pretty nervous about Europe," said CBA Institutional Equities head of sales Justin Rooney in Sydney.

And Auckland-based HiFX senior trader Stuart Ive warned: "Ultimately, I think the market is going to end up being pretty disappointed with whatever they put together" at the summit.

"They will come through with something but it's not going to be what the market is looking for. It certainly won't be a solution to the whole thing and we will get risk aversion coming back," he told Dow Jones Newswires.

Adding to downside pressure was the Fed's "Beige Book" September report on the world's biggest economy, which said while there was still growth in all areas, "many districts described the pace of growth as 'modest' or 'slight',".

It said business contacts "generally noted weaker or less certain outlooks for business conditions."

Wall Street reacted by closing in the red.

The Dow lost 0.63%, the S&P 500 shed 1.26% and the tech-heavy Nasdaq dived 2.01%.

On currency markets in Asia the euro bought $1.3763, up from $1.3755 late Wednesday in New York while it sat at 105.74 yen from 105.65.

The dollar changed hands at 76.83 yen, from 76.82 yen in New York late on Wednesday.

Oil was mixed. New York's main contract, West Texas Intermediate for delivery in November, was down five cents at $86.06 a barrel in Asian morning trade. Brent North Sea crude for December was up 36 cents at $108.75.

By 0220 GMT, gold was trading at $1,630.20 an ounce, down from $1,651.29 late on Wednesday.

First Published: Oct 20, 2011 08:23 IST