Eurozone woes, US data weigh on Asian stocks

HONG KONG: Asian stock markets tumbled on Thursday as the eurozone debt crisis came back to the fore with Greece on the brink of defaulting on its loans while US economic data also depressed sentiment.

Tokyo slumped 1.70 percent, or 163.04 points, to 9,411.28, Hong Kong fell 1.75 percent, or 390.66 points, to 21,953.11 and Sydney shed 1.91 percent, or 88.7 points, to 4,546.7.

Shanghai fell 1.52 percent, or 41.15 points, to 2,664.28 as concerns over fresh tightening measures after this week's inflation data also gripped the market.

Seoul fell 1.91 percent, or 39.90 points, to 2,046.63.

Athens warned Wednesday it would be unable to pay next month's bills without a 12-billion-euro ($17 billion) loan installment from the European Union and International Monetary Fund, part of a broader 110-billion-euro bailout agreed last year.

But the creditors have warned that no more aid will be forthcoming without firm reform commitments from Athens while eurozone finance ministers failed to reach an accord on a second package aimed at averting a Greek default.

As thousands protested in Athens over new austerity measures, Prime Minister George Papandreou said he would seek a confidence vote and announced a reshuffle after an offer to the opposition to join the government was apparently spurned.

The Greek troubles led Moody's to warn it could downgrade the rating of major French banks Credit Agricole, BNP Paribas and Societe Generale because of their exposure to the country's debt.

There are also fears that Greece's problems could spread throughout the financial system and lead to a credit crunch.

The deepening crisis sent global stocks falling, with the Dow 1.48 percent lower, London's FTSE 100 index down 1.04 percent, Frankfurt's DAX 1.25 percent off and the Paris CAC 40 falling 1.49 percent.

The troubles hammered the euro on Wednesday, falling to $1.4182 in late New York trade, compared with $1.4440 the previous day, and to 114.85 yen from 116.24 yen.

In afternoon Tokyo trade the single currency was at $1.4138 after hitting a three-week low $1.4113 at one point, while it also sat at 114.25 yen.

The dollar was at 80.78 yen from 80.92 yen.

"Moody's announcement was a blow to the euro, as vague worries in the market about the Greek debt problem may materialise in the form of a credit crunch hitting European financial institutions," said Dai Sato, dealer at Mizuho Corporate Bank.

"The euro showed slight resilience against the dollar in early trade but its underlying weakness remains unchanged," said.

And one senior dealer at a major bank in Tokyo said: "When describing investor sentiment on Greece, 'panic' is the right word."

Adding to traders' concerns was a set of figures out of the United States indicating problems for the recovery there.

Inflation in the world's biggest economy reached an annualised 3.6 percent in May, the Labor Department said, raising concerns that rising prices could bite into consumers' earnings.

Another report showed manufacturing in the New York region fared worse than expected.

"Asia is following disappointing offshore leads," said Morgan Stanley investment adviser Shannon Briggs.

"We've refocused on Greek debt and US economic data, but the big question is whether the US will have a double dip recession," Briggs told Dow Jones Newswires.

Oil was up in Asian trade. New York's main contract, West Texas Intermediate light sweet crude for July delivery, rose 47 cents to $95.28 a barrel in the afternoon.

Brent North Sea crude for August gained 96 cents to $113.97 on its first trading day.

Gold closed at $1,526.00-$1,527.00 an ounce in Hong Kong, up from Wednesday's close of $1,522.00-$1,523.00.

In other markets:

-- Taipei tumbled 2.00 percent, or 177.02 points, to 8,654.43.

Leading smartphone maker HTC shed 6.82 percent to Tw$997.0 while Taiwan Semiconductor Manufacturing Co was 1.95 percent lower at Tw$75.5.

-- Manila closed 0.67 percent, or 28.30 points lower, at 4,173.08.

Philippine Long Distance Telephone Co. fell 3.75 percent to 2,260 pesos but Aboitiz Power Corp. rose 0.33 percent to 29.85 pesos. Aboitiz Equity Ventures was unchanged at 40 pesos.

-- Wellington closed 0.71 percent, or 24.76 points, lower at 3,481.61.

Fletcher Building fell 1.2 percent to NZ$8.57 and Freightways was off 1.5 percent at NZ$3.41 while clothes store Pumpkin Patch lost 4.6 percent to NZ$1.04.

Copyright AFP (Agence France-Presse), 2011