Asian shares extend losses as Europe fears deepen

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GMT + 8 Hours Asian shares extend losses as Europe fears deepen

Post by ~lonely princess~ on Mon Sep 26, 2011 6:42 pm

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HONG KONG: Asian markets fell further on Monday due to nagging uncertainty over the eurozone as leaders of the debt-troubled region struggle to find a plan to solve the crisis.

The week got off to a poor start as investors were left unimpressed by a commitment at the weekend from G20 finance chiefs that they would take strong, co-ordinated action to avoid another global financial crisis.

And they are even more nervous as Europe heads into a crunch week that will be key to the future of the region.

Tokyo, which was closed Friday for a public holiday, fell 1.65 percent by the break, Hong Kong fell 0.67 percent, Shanghai lost 0.20 percent and Seoul shed 1.52 percent. But Sydney added 0.18 percent.

The losses extended those from last week, when some global indexes were sent tumbling to multi-year lows because of the ongoing European crisis as well as concerns over US economic growth.

The G20 meeting in Washington issued an emergency statement saying: "We are committed to a strong and coordinated international response to address the renewed challenges facing the global economy.

"We are taking strong actions to maintain financial stability, restore confidence and support growth," it said.

However, despite moves to shore up confidence in Greece, many fear the country will inevitably default on its loans, which could in turn spread to other economies and lead to another financial downturn.

Mitul Kotecha, a strategist at Credit Agricole, said: "A pledge by G20 officials to help combat the crisis gave some support to markets but given that there were no details on how this would be done, it will not do much to alleviate market stress without some concrete action."

And Teppei Ino, an analyst at the Bank of Tokyo-Mitsubishi UFJ, said the group "came short of mapping out any measures with immediate effects so have failed to stop the market's selling of risky assets".

A senior dealer at a major Japanese trust bank told Dow Jones Newswires: "Uncertainty will likely persist."

The sell-off comes as the eurozone faces a challenging week with European and IMF experts due to resume a fiscal audit that will decide if Athens can access it latest tranche of rescue funds to escape default.

And German lawmakers will Thursday vote on a beefed-up European Union stability fund that would permit sovereign debt restructuring, which the eurozone looks increasingly likely to need.

That vote is two days after Greek Prime Minister George Papandreou visits Berlin for talks with Chancellor Angela Merkel amid speculation that a second, multi-billion euro bailout for Athens crafted in July will need to be revised.

The euro dipped against major currencies in the morning. It sagged to $1.3428 in Tokyo morning trade from $1.3503 in New York late Friday. It also dipped to 102.72 yen from 103.31 yen, but remained above the fresh 10-year trough of 102.22 it hit last week.

The dollar was rangebound at 76.47 yen compared to 76.50 yen.

On oil markets New York's main contract, light sweet crude for delivery in November gained 18 cents to $80.03 per barrel.

Brent North Sea crude for November delivery advanced 42 cents to $104.39.

Gold fetched $1,644.05 an ounce by 0200 GMT, down from the $1,734.86 it was at by 0900 GMT Friday. (AFP)
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