Asian markets mostly down, Europe woes drag

Asian markets fell yesterday and the euro sat near one-year lows with traders unconvinced by Europe’s deal to save its currency and downbeat over the US Fed’s lack of fresh economy-boosting plans.
Adding to the poor sentiment was Germany’s opposition to raising the limit for Europe’s bailout fund, highlighting cracks in the region’s leadership.
Tokyo fell 0.39 percent, or 33.68 points, to 8,519.13. Olympus, which by the end of trade had not met a deadline to submit its much-delayed earnings, closed 4.1 percent lower. The firm posted its report soon after the end of trade.
Sydney was flat, closing 2.9 points lower at 4,190.5 and Seoul gave up 0.34 percent, or 6.31 points, to 1,857.75.
Hong Kong slipped 0.50 percent, or 92.74 points, to 18,354.43 and Shanghai shed 0.89 percent, or 20.06 points, to close at 2,228.53.
The US Federal Reserve said Tuesday it would hold interest rates for some time to come and that the world’s top economy was growing at a moderate level but warned of severe global headwinds.
Despite its concerns over the world outlook it did not unveil any fresh stimulus measures to kickstart growth, disappointing investors who had hoped for even an indication of future plans.
The Fed meeting “was a letdown for the many investors looking for any change in policies”, said Avis Wang, strategist at IG Markets in Singapore.
“Traders are likely to be cautious as there was no significant improvement to the situation in Europe,” he told Dow Jones Newswires.
Wall Street turned lower, with the Dow Jones Industrial Average off 0.55 percent, the S&P 500 0.87 percent lower and the Nasdaq diving 1.26 percent.
Asian investors were already nervous that last week’s deal in Europe, which aims to tighten budgetary rules and more closely integrate members, will not be enough to solve the region’s sovereign debt crisis.
Twenty-six of the European Union’s 27 members backed the “fiscal compact” but Berlin’s hopes for a treaty revision were dashed when Britain opted out, citing a lack of protection for the City of London financial centre.
The European single currency sank to USD 1.2995, its lowest level since January 12 at 1145 GMT yesterday, hitting the lowest point since the start of the year on mounting concern about the eurozone’s sovereign debt crisis.
The euro had slipped below USD 1.31 in New York on Tuesday for the first time since January to remain under pressure in Asia.
It had traded at USD 1.3046 and 101.70 yen in Europe, compared with USD 1.3033 and 101.66 in New York late Tuesday.
It was expected to fall further as the market turns risk-averse, after a report said Germany was opposed to raising the 500-billion-euro lending limit for the planned European Stability Mechanism (ESM).
The ESM is to succeed the eurozone’s temporary bailout fund, the European Financial Stability Facility, next year.
At a meeting of her ruling party on Tuesday, German Chancellor Angela Merkel signalled to lawmakers that Berlin remained opposed to any increase.
Germany’s stance underscores a rift among some European leaders over boosting the fund’s firepower and how best to tackle the eurozone’s fiscal woes.
The dollar was trading at 77.95 yen against 78.00 yen in New York.
Dealers are keeping an eye on Standard & Poor’s, which is expected to pass judgement on last Friday’s agreement this week after putting 15 of 17 euro-member states – including France and Germany – on downgrade warning.
The agency last week announced the AAA status of the EU itself was under threat. Fitch Ratings predicted a “significant” economic downturn in Europe with the debt crisis likely to continue through 2012, while Moody’s said the crisis remains in a “critical and volatile stage”.
In another clear signal of the worldwide impact of the eurozone crisis, the oil cartel OPEC and the International Energy Agency both revised their previous forecasts for global oil demand downwards, citing a slowdown in growth.
That weighed on crude prices. New York’s main contract, light sweet crude for January delivery, fell seven cents to USD 100.07 a barrel and Brent North Sea crude for January delivery was off 39 cents at USD 109.11.
Gold was trading at USD 1,637.90 an ounce at 0950 GMT, against USD 1,664.80 an ounce late Tuesday.

(AFP)