World Stocks Down Despite Deal To End Greek Crisis

Published February 21, 2012 9:00AM (EST)

BANGKOK (AP) — World stock markets were mostly lower Tuesday even as European leaders finally clinched a deal for a rescue package to prevent Greece from going belly up.

Benchmark oil hovered near $105 per barrel while the dollar fell against the euro but rose against the yen.

Shares in Europe opened lower, just hours after leaders reached an agreement on a financial rescue package for Greece, which is teetering on the brink of a major debt default.

Britain's FTSE 100 fell 0.4 percent to 5,923.93 and Germany's DAX lost 0.3 percent to 6,927.46. France's CAC-40 shed 0.4 percent to 3,457.23.

But U.S. stock futures advanced after a three-day public holiday. Dow Jones industrial futures were up 0.4 percent to 12,983 and S&P 500 futures rose 0.3 percent to 1,364.

Asian shares were mixed earlier in the day. Japan's Nikkei 225 index closed down 0.2 percent at 9,463.02. Hong Kong's Hang Seng rose 0.3 percent to 21,478.72 and South Korea's Kospi was nearly unchanged at 2,024.24.

Benchmarks in Taiwan and the Philippines fell while Singapore, Australia and mainland China rose.

Greece urgently needs the euro130 billion ($170 billion) package before it can move ahead with yet another deal to sharply reduce the amount of money Greece owes its private investors. Without the money, Greece will default on its debts, starting on March 20 when a bond repayment is due.

Many observers feel it falls far short of what Greece needs to prevent financial collapse. On top of that: Europe does not have the will or the ability to spend the amount actually required to keep Athens afloat, analysts said.

"Greece is a hopeless case," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "I don't think you should throw good money after bad. It's a bottomless pit. It doesn't make sense."

In Tokyo, a waning yen failed to perk up many of Japan's big exporters, whose profits increase when the home currency weakens. Panasonic Corp. lost 1.9 percent, Sharp Corp. fell 2 percent and Nintendo Co. fell 1.6 percent.

Hong Kong-listed China Railway Construction Corp. jumped 2.1 percent on news of China's decision to accelerate development in its western regions, including about 9,300 miles (15,000) kilometers of railways that will be opened by the end of 2015, the official Xinhua news agency reported Tuesday.

But oil refiners, airlines and shippers were hurt by rising oil prices. Hong Kong-listed China Petroleum and Chemical Corp., Asia's biggest oil refiner known as Sinopec, fell 1 percent. Japanese shipping company Mitsui O.S.K. Lines shed 1.1 percent. Korean Air Lines Co. plummeted 6.4 percent.

Mainland Chinese shares in information technology, household appliances, media and entertainment-related companies led the advance.

"The market continued to rise mainly due to the positive news over the weekend with the reduction in bank reserve requirements. Investors expect that monetary policy will not be tight this year," said Li Jianfeng, an analyst at Caida Securities, based in Shanghai.

China Television Media Ltd. gained 7.7 percent while Shanghai Xinhua Media Co. added 2.6 percent, helped by government plans to single out the media and entertainment industries for support in coming years, Li said.

In Australia strong earnings reports helped set a positive tone. OneSteel, the country's second-biggest steel maker, jumped 12.3 percent after releasing a bullish forecast about growth from its mining interests.

Benchmark crude was up $1.49 to $104.73 a barrel in electronic trading on the New York Mercantile Exchange.

The euro jumped to $1.3270 from $1.3159 late Friday in New York. The dollar rose to 79.63 yen from 79.46 yen.


AP researcher Fu Ting contributed from Shanghai.

By Salon Staff

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