HONG KONG: Asian markets extended their losses Thursday and the euro dived as concerns over the eurozone debt crisis refused to abate, ahead of an auction of long-term Italian debt later in the day.
With trading light due to the Christmas holidays, Asia also had little cue for direction from Wall Street and Europe despite Rome enjoying a successful sale of short-term bonds on Wednesday.
Tokyo was 0.73 percent lower by the break, Hong Kong fell 1.06 percent, Sydney gave up 1.04 percent, Seoul lost 0.41 percent and Shanghai was 0.15 percent off.
Japanese exporters were hurt as the yen surged to its highest level against the euro since June 2001, with dealers also nervous ahead of the Italian bond sale.
In early Asian trade the European currency fell to 100.49 yen, its lowest level since June 2001, compared with 100.80 in New York late Wednesday, while it also hit an 11-month low of $1.2903 compared with $1.2912.
The dollar stood at 77.86 yen, from 77.90 in New York.
Markets took scant relief from Italy's auction Wednesday of 9.0 billion euros in six-month bonds at low rates, with broader eurozone worries still dominating trade.
The average rate on the debt for Rome was 3.25 percent, half the 6.50 percent paid in a similar operation in November, when worries that Italian finances might collapse filled the markets.
"The short end (Italian debt auction) obviously went better than expected, but the big test for markets tonight (Thursday) will be how the long end goes," Sydney-based Macquarie Private Wealth division director Martin Lakos said.
"Trading is going to remain thin and volatile," he told Dow Jones Newswires.
Market-watchers will be keen to see if Italy's 10-year bond sale generates interest rates of more than seven percent -- a level that is seen as unsustainable for governments to service their debt.
News that eurozone banks deposited a record amount of overnight funds at the European Central Bank on Tuesday -- breaking the record set the day before -- indicated lingering tensions in the single-currency zone.
Banks put 452.03 billion euros on deposit for 24 hours at the ECB overnight Tuesday, beating the previous record of 411.8 billion euros set Monday.
Rising levels of deposits are seen as a sign of market tension, with heavy use of the facility suggesting banks favour parking the money at low interest rates rather than lending to each other.
The huge amounts indicate banks are hoarding cash after more than 500 of them last week borrowed a record 489.2 billion euros from the ECB in a new three-year lending facility.
Oil was mixed. New York's main contract, light sweet crude for delivery in February, was up 33 cents to $99.69 a barrel. Brent North Sea crude for February delivery was down three cents at $107.53.
Gold stood at $1,554.50 an ounce at 0225 GMT, compared with $1,588.26 late Wednesday.
Comments
Comments are closed for this article.