Greek Prime Minister George Papandreou addresses Socialist members of parliament in Athens, Monday, Oct. 31, 2011. (AP/Thanassis Stavrakis)

Asian stocks down on Europe debt plan doubts

Greece plans to hold referendum on debt deal, casting doubt on future of plan


Pamela Sampson
November 1, 2011 10:00AM (UTC)

BANGKOK (AP) — Asian stock markets fell Tuesday as new concerns emerged about the viability of a much-heralded plan to contain Europe's debt crisis.

Benchmark oil fell to near $92 a barrel. The dollar rose slightly against the yen, a day after jumping about 5 percent following Japan's move to buy dollars and sell the strong yen to protect its exporters.

Advertisement:

Japan's Nikkei 225 index dropped 1.4 percent to 8,859.21. Hong Kong's Hang Seng lost 1.4 percent to 19,584.69, and Australia's S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India and Indonesia were also down.

South Korea's Kospi gained 0.1 percent to 1,911.39. Key indexes in Taiwan, Malaysia and Thailand also rose.

Wall Street tumbled Monday, with confidence shaken by the collapse of the brokerage house MF Global. The securities firm filed for bankruptcy protection after it was downgraded by ratings agencies for holding too much European debt.

The company's collapse startled investors already nervous that the United States — with an economy growing at the slowest pace since the end of the Great Recession — is in danger of falling back into recession.

The Dow Jones industrial average spiraled down 2.3 percent to close at 11,955.01. The S&P 500 fell 2.5 percent to 1,253.30, and the Nasdaq composite fell 1.9 percent to 2,684.41.

European leaders reached an agreement Thursday aimed at shoring up the region's banks and preventing a severe debt crunch in Greece from bringing down Europe's financial system.

Advertisement:

But the European debt crisis is still far from fixed. One troubling sign is that borrowing costs for Italy and Spain have increased, a signal that traders remain worried about those countries' ability to pay their debts.

Complicating the picture further was the announcement by Greek Prime Minister George Papandreou on Monday that his debt-strapped country will hold a referendum on whether to accept the European debt deal.

"That puts everything in question. No longer do you have Greece backing it," said Andrew Sullivan, principal sales trader at Piper Jaffray in Hong Kong. "It is putting another level of uncertainty into it, and the markets don't like uncertainty."

Meanwhile, surveys showing China's manufacturing remained sluggish in October also weighed on investor sentiment. Hong Kong-listed GOME Electrical Appliance Holdings, China's largest appliances retailer, fell 5.8 percent. Anhui Conch Cement Co. fell 3.6 percent. China's biggest steel company, Baoshan Iron & Steel Ltd., lost 0.4 percent.

Advertisement:

But Qantas Airways rose 1.6 percent as the world's 10-largest airline took to the skies again after a debilitating series of strikes and subsequent staff lockout were halted by an Australian court.

Negative earnings also weighed on shares.

Japanese consumer electronics giant Panasonic Corp. tumbled 4.5 percent, a day after reporting a quarterly loss and projecting a huge annual loss due to slumping TV sales and a strong yen.

Advertisement:

Australian retailer Harvey Norman fell 3.7 percent after the company reported a drop of almost 20 percent in pre-tax earnings in the three months to September.

In energy trading, benchmark crude for December delivery was down 82 cents at $92.37 a barrel in electronic trading on the New York Mercantile Exchange. The contract slipped 13 cents to settle at $93.19 in New York on Monday.

The euro fell to $1.3804 from $1.3924 late Monday in New York. The dollar rose slightly to 78.07 yen from 78.05 yen.

Advertisement:

Pamela Sampson

MORE FROM Pamela Sampson

Related Topics ------------------------------------------

European Financial Crisis From The Wires

BROWSE SALON.COM
COMPLETELY AD FREE,
FOR THE NEXT HOUR

Read Now, Pay Later - no upfront
registration for 1-Hour Access

Click Here
7-Day Access and Monthly
Subscriptions also available
No tracking or personal data collection
beyond name and email address

•••





Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •