Singapore: Asian stocks fell 1-2% on Thursday as the fallout from Wall Street’s 4% drop overnight limited by a rise in U.S. stock futures, while gold climbed above $1,800 an ounce to a new record, reflecting fears over Europe’s worsening financial crisis.
The Australian dollar, often a measure of investors’ willingness to take risks, rose toward $1.02 as Asian equities pulled back from their lows, suggesting traders and investors were being nimble rather than selling with blinders on.
Fast-moving rumours about a sovereign debt downgrade of France as well as talk doubting the health of French bank swirled in Europe, causing the biggest widening in the benchmark index of European credit default swaps since the credit crunch in 2008.
“The market is in a bit of heat-seeking missile mode looking for vulnerabilities around the world, and Europe is obviously in its sights at this point in time,” said Grant Turley, senior strategist at ANZ in Sydney.
Japan’s Nikkei share average rose 1.5% in early trade , still not far from the five-month low hit on Tuesday.
The benchmark MSCI Asia Pacific ex-Japan stocks index fell 1.2% , with commodity-related stocks hit hardest. The index has fallen 13% so far in August, in line with the all-country world index , suggesting investors are not being so discriminating in the equity sell-down.
The euro was still vulnerable, especially against the yen and Swiss franc, but recovered some ground as Asian equities edged up from their lows.
The euro was at $1.4175 , largely unchanged on the day and locked within a tight trading range by a debt crisis in Europe and a U.S. slowdown.
The Australian dollar was up 0.3% to $1.0190 , holding above Tuesday’s drop to below parity but well off from $1.10 where the currency started the month.
Spot gold prices were up 0.5% to $1,802.89 an ounce after earlier hitting an all-time high of $1,813.79.
The undisputed safe haven has risen 11% so far this month and is up 27% in 2011.