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Asia stocks lose ground US stimulus plan delay

Asia stocks lose ground US stimulus plan delay
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First Published: Tue, Feb 10 2009. 09 03 AM IST
Updated: Tue, Feb 10 2009. 09 03 AM IST
Tokyo: Asian stocks pared gains on Tuesday as doubts grew about US plans to create a bank to soak up toxic debts, while the euro fell over 1% against the yen and the dollar on a report that Russia is set to request a delay in repaying debt.
Russia will request negotiations with European and other foreign banks to postpone repayment on up to $400 billion of its private-sector debt, Japan’s Nikkei business daily said on Tuesday.
The report, which could not be immediately confirmed, sent the euro tumbling 1.2% to $1.2849 and 1.6% to ¥117.08 before it clawed slightly higher again.
US stock futures initially fell over 1% after CNBC, quoting what it said was a source familiar with the plan, initially reported that the US Treasury has dropped plans to establish a “bad bank” to buy distressed assets from commercial banks as part of a financial rescue package. CNBC later said the plan would include a new form of “bad bank”, using public and private funds.
While such a plan would remove soured assets which are contaminating banks’ balance sheets, freeing them up to lend again, the expected use of taxpayers’ money and fears of further losses have made the issue highly politically charged for President Barack Obama.
Wall Street finished flat on Monday as traders’ anxiety grew after the announcement of the bank plan was postponed by one day until 11am on Tuesday. The nervousness helped erase early gains in Asian markets.
An $838 billion economic stimulus bill passed a key procedural hurdle in the US Senate on Monday, paving the way for the chamber to pass the bill on Tuesday. But then final negotiations must begin with the House of Representatives - whose own bill is priced at $819 billion - on a compromise bill.
Japan’s Nikkei share average edged up 0.2%, paring earlier gains that saw it rise over 1%.
Nissan Motor Co surged 7.3% after it announced drastic steps on Monday to cope with the recession, saying it would cut 20,000 jobs. It joined a growing list of automakers warning of red ink this year.
The MSCI index of Asia-Pacific stocks outside Japan fell 0.9%.
Hong Kong’s Hang Seng was up 0.3 % after extending gains on Monday to its longest rally in two months, while shares on the Shanghai bourse were flat amid questions about the sustainability of a recent bull run in Chinese markets.
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First Published: Tue, Feb 10 2009. 09 03 AM IST
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