Asia stocks fall amid widening Europe debt woes
Asian stock markets tumbled Tuesday as investors fretted Ireland’s debt crisis will spread to other financially weak European countries.
The declines in Asia came a day after the region’s stocks rose on initial relief about the European Union and International Monetary Fund bailout of Ireland’s heavily indebted banks.
But that optimism quickly evaporated. There are doubts Ireland’s government will survive long enough to secure parliamentary approval for a budget that will include multibillion dollar spending cuts as a condition of the outside assistance.
Experts also said the bailout — the total amount of which is still being decided — would do little to shield other heavily indebted countries from a potential collapse in investor confidence, most immediately Portugal but also potentially Spain, Italy and Greece.
“The euro debt crisis will provide an excuse for investors to stay on the sidelines for the time being,” said Ben Kwong Man Bun, the chief operating officer at KGI Securities in Hong Kong. “The debt crisis will put pressure on the euro and keep the U.S. dollar stronger, and that will put pressure on equity markets.”
South Korea’s Kospi lost 0.8 percent to 1,491.16 and Hong Kong’s Hang Seng slid 2.5 percent to 22,936.61. Japan’s market was closed for a national holiday.
China’s Shanghai Composite Index dived 1.9 percent to 2,828.28 with sentiment hurt by expectations Beijing will take more steps to cool inflation that could slow economic growth.
Australia’s S&P/ASX 200 dropped 1.2 percent to 4589.10. Benchmarks in Singapore, India and Taiwan also fell.
Ireland’s rescue comes after a Greek bailout in May and is the European Union’s latest attempt to win back market confidence and keep its 16-nation euro currency strong and stable. But the cost — both monetary and political — keeps rising by the day.
Analysts say Irish Prime Minister Brian Cowen faces a tough battle just to clear the first hurdle of the budget process on Dec. 7, when spending cuts will be unveiled and face an initial vote.
The EU’s economic and monetary affairs minister, Olli Rehn, said nothing should slow passage of the emergency budget and negotiation of the bailout.
On Monday in New York, stocks were narrowly mixed because of the European debt crisis as well as an expanding probe into insider trading.
Bank shares fell after two hedge fund offices were raided by authorities, while retail and consumer goods stocks rose on hopes for strong Christmas sales as the holiday shopping season kicks off.
The Dow Jones industrial average fell 24.97 points, 0.2 percent, to 11,178.58 on Monday. The broader Standard & Poor’s 500 index fell 1.89, or 0.2 percent, to 1,197.84.
In currencies, the euro fell to $1.3566 from $1.3625 late Monday. The dollar rose to 83.63 yen from 83.28 yen.
Benchmark oil for January delivery was down 42 cents to $81.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 24 cents to settle at $81.74 on Monday.
Source: AP