Hong Kong: Asian shares fell in thin pre-Christmas trade on Friday as eurozone fears returned after Portugal’s debt rating was cut due to concerns it could slip into recession.
The news from Europe led investors to ignore a batch of upbeat data supporting hopes for a strong recovery in the United States.
Tokyo fell 0.71% by the break as exporters were hit by a weak euro.
Dealers sold off the single currency after ratings agency Fitch cut its rating on Portuguese debt a notch, citing a “deteriorating near-term economic outlook”.
The agency pointed out that it was increasingly difficult for Lisbon to find financing since its last assessment in March and predicted it was likely to fall into recession in 2011.
The euro stood at ¥109.02 in early Tokyo trade Friday, slightly up from 108.83 in New York late Thursday but down from 110 levels before Portugal’s downgrade.
The single currency was also at $1.3115, down from 1.3118 in New York.
“It’s starting to appear that the (weak) euro is going to plague the market next year as well,” Yutaka Yoshii, general manager at Mito Securities, told Dow Jones Newswires.
Hong Kong slipped 0.45%, Sydney fell 0.46%, Seoul dropped 0.27% and Singapore shed 0.18%.
Shanghai was 1.18% off due to lingering concerns over possible monetary tightening measures from China as the government tries to rein in inflation.
Despite the losses, Asian markets were given a good lead from the United States, where jobless claims fell, consumer confidence rose and the housing market, which was at the heart of the financial crisis, seems to picking up.
A University of Michigan survey on Thursday showed consumer confidence in the world’s biggest economy hit a six-month high in December.
The index placed consumer sentiment for this month at 74.5, compared with November’s 71.6 level.
“Consumer confidence improved in December to its best level in six-month and its second highest level since the start of 2008,” the survey said.
“The gain was due to improved employment expectations that made consumers more willing to spend and adopt more favorable prospects for the overall economy.”
At the same time consumers earned and spent more in November, boosting expectations for a strong holiday shopping season.
New jobless claims sat around their lowest levels of the year last week at 420,000, according to the Labor Department.
And sales of new homes in the United States in November rose 5.5% month on month to 290,000, reaffirming that the struggling housing market was slowly recovering.
The US data kept oil hovering around two-year highs. New York’s main contract, light sweet crude for delivery in February, shed 13 cents to 91.38 and Brent North Sea crude for February advanced 18 cents to $94.43.
Gold opened at $1,380.00-1,381.00 an ounce in Hong Kong, down from Thursday’s close of $1,385.50-1,386.50.