World Stocks Fall Before Greek Debt Deal Deadline

By Salon Staff

Published March 7, 2012 9:18AM (EST)

BANGKOK (AP) — World stock markets were mostly lower Wednesday as jittery investors awaited a deadline for Greece to get sufficient support from its private creditors for a debt reduction deal or face default.

Benchmark oil rose above $105 per barrel while the dollar fell against the yen and the euro.

The losses in stock markets came a day after Wall Street had its first big stumble of 2012 on Tuesday, with the Dow Jones industrial average dropping more than 203 points.

The big concern among investors is a deadline Thursday for Greece's private bondholders to accept a deal to swap their Greek government bonds for replacements with a lower face value and interest rate.

The swap is vital for Greece to cut its debt and get a bailout of euro130 billion ($172 billion) from other countries and the International Monetary Fund. Without the bailout, Greece could default on its debt later this month and rattle markets around the world.

"Rumours that a slack participation rate by private investors in the Greek bond swap might force Athens to extend the deadline beyond Thursday are likely to keep investors at bay. The last thing markets want to see is uncertainty," Stan Shamu, market analyst at IG Markets in Melbourne, said in an email.

A report showing that the combined economies of euro countries shrank at the end of 2011 and talk of war from Israel over Iran's nuclear program also weighed on investors' nerves.

European stocks were mixed in early trading. Britain's FTSE 100 was marginally down at 5,762.73. Germany's DAX lost 0.2 percent to 6,619.91 and France's CAC-40 rose 0.1 percent to 3,366.10.

Wall Street was headed for a higher opening, with Dow Jones industrial futures rising 0.2 percent to 12,775 while S&P 500 futures gaining 0.3 percent to 1,246.30.

Earlier in Asia, Japan's Nikkei 225 index fell 0.6 percent to close at 9,576.06.

Hong Kong's Hang Seng slid 0.9 percent to 20,627.78 and South Korea's Kospi lost 0.9 percent to 1,982.15. Benchmarks in Australia, Taiwan, Singapore and Indonesia also fell.

In mainland China, the benchmark Shanghai Composite Index lost 0.7 percent to 2,394.79. The Shenzhen Composite Index for China's second, smaller exchange lost 0.5 percent to 967.05.

Among individual stocks in Asia, Hong Kong-listed China Life Insurance, the country's biggest life insurer, plunged 6.1 percent after it issued a profit warning relating to its 2011 results.

In Tokyo, Hitachi rose 1.1 percent after Kyodo News agency reported the company's sale of its U.S. arm that makes hard disk drives to California-based Western Digital Corp. will be completed on Thursday.

China's lower economic growth target of 7.5 percent weighed on resource and mining stocks because the country is such a huge importer of raw materials.

Australia's Newcrest Mining tumbled 3.8 percent and Fortescue Metals Group lost 3.3 percent. Rio Tinto fell 1.9 percent after announcing it would close an aluminum smelter in England this month.

Mainland Chinese shares in nonferrous metals and coal miners also weakened.

"Losses by nonferrous metal and coal companies reflect investors' worries over slowing economic growth that might hurt demand," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.

Benchmark oil for April delivery was up 40 cents to $105.12 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell by $2.02 Tuesday to $104.70 per barrel in New York.

In currencies, the euro rose to $1.3127 from $1.3110 late Tuesday in New York. The dollar fell to 80.61 yen from 80.78 yen.

Salon Staff

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