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Asia stocks down as Europe holds another summit

Source : AP
Last Updated: Thu, May 24, 2012 05:16 hrs

Asian stock markets faltered Thursday as the lack of a breakthrough in Europe's attempts to shake off its debt crisis kept sentiment gloomy.

Worries over Greece intensified after European leaders adjourned a summit without taking concrete measures to prevent Europe's debt crisis from exploding and Greece from making a messy exit from the region's shared currency.

The likelihood of Greece leaving the euro has been growing since early May, when political parties opposed to the terms of the country's financial rescue deprived pro-austerity parties of a majority at the polls. New elections are planned for next month.

"Many European countries are preparing for a Greek exit, so I think this is what scares the people most. It will be a chaotic and disorganized exit if and when it happens," said Francis Lun, managing director at Lyncean Holdings in Hong Kong.

"The outlook is still very pessimistic for the euro, so that is why the Asian markets continue to fall," he said.

Japan's benchmark Nikkei 225 was 0.6 percent lower at 8,509.79. Earlier, the benchmark hit 8,497.06 — its first time below 8,500 in more than four months.

Hong Kong's Hang Seng fell 0.6 percent to 18,671.85. South Korea's Kospi was down 0.3 percent at 1,803.36. Australia's S&P/ASX 200 shed 0.4 percent to 4,051.90. Benchmarks in Taiwan, Indonesia and mainland China also fell.

Meanwhile, HSBC Corp. said Thursday its Purchasing Managers Index based on a survey of Chinese manufacturers showed activity weakened further in May.

A preliminary PMI, based on responses by 85 to 90 percent of companies surveyed for the full index which is released later, fell to 48.7 from April's 49.3 on a 100-point scale. Numbers below 50 indicate a contraction.

Beijing has tried to pump money into the economy by easing credit controls but Chinese media say bank lending has barely grown this month compared with a year earlier. That suggested companies were delaying investment due to uncertainty about the economic outlook.

Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, said the results may spur China toward monetary and fiscal easing.

"We expect implementation of stimulus measures flagged earlier this week, especially in terms of infrastructure spending, which would help manufacturing recover. This would ultimately prove positive in the midterm," he wrote in an email.

The prospect of more action by Chinese authorities helped lift construction and infrastructure-related shares. Hong Kong-listed China Resources Cement Holdings added 1.7 percent, China National Building Material Co. added 2.1 percent, and China Railway Group Ltd. jumped 4.1 percent.

Australian energy shares were mixed, with bargain-hunting tempering losses, analysts said. Woodside Petroleum Ltd. rose 0.6 percent and Newcrest Mining gained 0.7 percent but Fortescue Metals Group shed 2.4 percent.

Japanese exporters also struggled. Mazda Motor Corp. lost 4.6 percent and Canon Inc. was 2.9 percent down.

Wall Street was mixed Wednesday. The Dow Jones industrial average fell 0.1 percent to 12,496.15. The Standard & Poor's 500 index rose 0.2 percent to 1,318.86. The Nasdaq rose 0.4 percent to 2,850.12.

Benchmark oil for July delivery was up 50 cents to $90.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.95 to settle at $89.90 in New York on Wednesday. Brent crude for July delivery was up 99 cents at $106.55 per barrel in London.

In currency trading, the euro was steady at $1.2573, its level late Wednesday in New York. The dollar was unchanged 79.47 yen.

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