Citi rescue fails to boost Asia stocks

Citi rescue fails to boost Asia stocks
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First Published: Mon, Nov 24 2008. 02 06 PM IST
Updated: Mon, Nov 24 2008. 02 06 PM IST
Hong Kong: Asian shares pared losses and US stock futures gained on Monday after the US government rescued Citigroup with a plan that was seen providing a template for other banks facing losses from toxic investments.
European shares were set to gain 4-5% at the open, while oil prices rose on hopes that Opec will cut output as early as this week to shore up crude prices that have tumbled to their lowest in more than three years.
But earlier gains on global markets following the Citigroup announcement faded, while so-called safe-haven assets such as the yen held firmer, signalling that concerns about the broader financial sector and the global economy are likely to remain.
“The reaction so far has been relatively muted because maybe there are as many questions about this as there are answers in terms of saving and stabilising Citigroup,” said Tony Morriss, a senior currency strategist at ANZ Bank in Sydney.
The MSCI index of Asia-Pacific stocks excluding Japan briefly posted a small gain after the Citigroup news, but was down 0.7% at 0720 GMT.
That was an improvement from early in the session, when the index fell as much as 1.7%. Japanese markets were closed for a public holiday.
The US Treasury Department said it would prop up Citigroup with more than $300 billion in the largest bailout for a sector crippled by exposure to toxic mortgage debts and a crumbling US economy.
Australian stocks reversed earlier losses to close 0.3% higher. US stock futures firmed, with the S&P 500 December 500 futures up 0.7% and the Dow Jones futures index up 0.05%.
Indexes elsewhere cut losses, but remained in negative territory, with Hong Kong, India and Singapore all falling more than 1%.
South Korean shares shares and Chinese shares lost more than 3%.
Shares in Asian banks such as South Korea’s KB Financial Group, Commonwealth Bank of Australia and Hong Kong-listed HSBC fell amid concerns about how much capital the broader financial sector will need.
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First Published: Mon, Nov 24 2008. 02 06 PM IST
More Topics: Market Crisis | Global | Asia | Stocks | Citigroup |