Hong Kong: Asian markets mostly fell and the euro suffered a sell-off on Friday after the European Central Bank (ECB) told Cyprus it would cut off funding to its banks if it did not agree a new bailout deal soon.
Regional markets followed losses in Europe and on Wall Street as Nicosia struggles to find new ways to raise cash to qualify for bailout funds, after its plan to tax savings was overwhelmingly rejected on Tuesday.
Tokyo tumbled 2.35%, or 297.16 points, to 12,338.53, while Seoul fell 0.11%, or 2.11 points, to 1,948.71 and Hong Kong fell 0.50%, or 110.58 points, to 22,225.30.
But Sydney rose 0.16%, or 7.9 points, to 4,967.3, although it is down 3% for the week, while Shanghai rose 0.17%, or 4.04 points, to 2,328.28.
Cypriot politicians have until Monday to approve a “Plan B” bailout deal with the European Union and International Monetary Fund or face being choked from ECB funds, which would likely cause the island’s banks to collapse.
Adding to pressure, an EU source said that unless Nicosia pushed a workable plan through parliament and restructured its banking sector by Tuesday it risked expulsion from the euro zone.
Global markets have this week largely been driven by the crisis in Cyprus after the government at the weekend unveiled a plan to tax deposits up to 10% as part of a deal to qualify for a EU/IMF $13 billion bailout.
The proposal met with global consternation, with markets diving. Despite a revised plan that eased the burden on poorer people, lawmakers threw it out, leaving the island desperate for cash to pay its huge debts.
However, Macquarie Private Wealth division director Martin Lakos told Dow Jones Newswires: “Cyprus has reminded investors of European risks, but I don’t think Cyprus itself is a big risk for the market.
“The market was due for a pullback despite pretty good US economic data in recent months, but it’s still very much a buy-the-dips environment.”
The events in Cyprus have, however, halted a months-long rally in the euro and the dollar against the yen.
In Tokyo on Friday the dollar fetched 94.38 yen and the euro 121.94 yen, compared with 95.01 yen and 122.58 yen in New York late on Thursday. That compares with 95.84 yen and 123.90 yen Thursday in Asia.
The euro was also at $1.2918, compared with $1.2902 in New York. The single currency was at $1.2923 earlier Thursday.
Adding to pessimism in Europe was data showing further weakness in manufacturing.
The euro zone Purchasing Managers’ Index (PMI) published by London-based Markit showed the German economy was starting to be affected by the problems in the rest of the region while the French slowdown is accelerating.
Overall the euro zone PMI, a leading indicator of growth, fell to a four-month low of 46.5 points in March against 47.9 in February.
A figure above 50 indicates growth while anything below points to contraction.
On Wall Street the Dow fell 0.62%, the S&P 500 dropped 0.83% and the Nasdaq gave up 0.97%.
On oil markets New York’s main contract, light sweet crude for delivery in May was up 16 cents to $92.61 a barrel in the afternoon while Brent North Sea crude for May lost 15 cents to $107.32.
Gold was at $1,611.50 an ounce at 1040 GMT compared with $1,608.40 late on Thursday.
In other markets:
—Singapore fell 0.30%, or 9.08 points to close at 3,258.57.
DBS Bank dropped 0.32% to Sg$15.54 and Singapore Airlines climbed 0.93% to Sg$10.84.
—Taipei rose 0.20%, or 15.62 points, to 7,796.22.
Taiwan Semiconductor Manufacturing Co. was 0.71% lower at Tw$98.0 while leading smartphone maker HTC rose 0.42% to Tw$240.0.
—Manila closed 0.71% higher, adding 45.73 points to 6,518.71.
Ayala Corp. rose 0.18% to 551 pesos and BDO Unibank advanced 4.02% to 87.90 pesos, but Philippine Long Distance Telephone fell 0.64% to 2,792 pesos.
—Wellington was virtually unchanged, edging up 0.38 points to 4,342.89.
Mainfreight shed 2.7% to NZ$10.90, while Auckland Airport was up 1.4% at NZ$2.82.
—Jakarta, fell 1.66%, or 79.51 points, to 4,723.16.
Indocement Tunggal Prakarsa fell 3.70% to 22,150 rupiah, while Indofood Sukses Makmur dropped 2.04% to 7,200 rupiah.
—Bangkok lost 3.30%, or 50.55 points, to 1,478.97.
Oil company PTT fell 4.76% to 320.00 baht, while Bangchak Petroleum dropped 5.71% to 33.00 baht.
—Kuala Lumpur eased 0.24%, or 3.86 points, to 1,626.89.
Hong Leong Financial Group fell 1.1% to 14.72 ringgit while YTL Power International shed 0.7% to end at 1.41 ringgit. Astro Malaysia Holdings rose 1.4% to 2.90 ringgit.
—Mumbai fell 0.30% or 57.27 points to 18,735.6 points.