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Greek woes hit Asian shares, euro down
[Dawn] A tumble in global stocks spreads to Asia on Wednesday as fears heightened that Greece's debt woes could spread to other countries, which pushed the euro down to one-year lows against the dollar.Shares in Europe are expected to open little changed, stabilising after the FTSEurofirst 300 index of leading European shares dropped 3 percent to a two-month closing low on Tuesday. The MSCI index of Asia ex-Japan stocks fell nearly 2 percent, with Shanghai and Hong Kong hitting seven-month and nine-week lows, respectively, as scepticism over the 110 billion euro ($142 billion) bailout plan intensified. The euro, which suffered its steepest one-day loss since last June in the previous session, notched another one-year low at $1.2936 before recovering slightly. Traders expected the single currency to remain under pressure. "One gets the feeling that the euro zone is turning out to be a basket case and of course rumours about Spain and Portugal's sovereign debt aren't helping. I suspect the market wants to take the euro to as low as $1.25 in the short term," said Joanthan Cavenagh, currency strategist at Westpac in Sydney. Markets in Japan, Korea and Thailand were closed for holidays. Risk aversion lifted the dollar up, with its index gaining 0.26 percent on top of a 1.4 percent rise on Tuesday. That was the biggest daily gain so far this year and took the index to the highest since May 2009. Oil extended losses falling towards $82, following the steepest one-day percentage loss in three months on Tuesday, on rising inventories and a firm dollar. "A combination of worries including contagion to Spain and Portugal, policy tightening in China, debt concerns in the UK and Japan, all threaten to undo the positive message from economic data," Mitul Kotecha, head of global FX strategy at Credit Agricole said in a note to clients. The immediate attention remains on Greece and growing scepticism about Greece's ability to carry out austerity measures in the face of rising domestic opposition, Kotecha said. In Athens, striking public workers challenged Greece's bailout-for-austerity deal, starting a 48-hour national strike that shut down ministries, tax offices, schools, hospitals and public services. Posted by: Fred 2010-05-06 |
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