Asian markets mixed ahead of key Germany vote

Asian markets mixed ahead of key Germany vote

Hong Kong: Asian markets were mixed in choppy trade on Thursday ahead of a key vote by Germany’s parliament on whether to approve an expansion of the eurozone’s rescue fund.

A new European Union-International Monetary Fund audit of Greece’s progress under its €110 billion ($150 billion) bailout also weighed on sentiment.

Tokyo reversed early losses to finish 0.99% higher, with the benchmark Nikkei 225 index rising 85.58 points to 8,701.23 as the market welcomed a rebound in the euro.

But Seoul was the standout performer, putting on 2.68% amid growing expectations that Germany will likely be the latest of the 17 eurozone parliaments to ratify an expansion of the €440 billion ($599 billion) fund.

“Of course it won’t solve the eurozone’s fundamental debt problem, but at least it will provide some relief," Tong Yang Securities analyst Cho Byung-Hyun told Dow Jones Newswires.

Sydney slipped 0.77%, but finished off its lows, while Chinese shares finished 1.12% lower on fears of a domestic slowdown due to the woes in Europe and the US.

The Shanghai Composite Index, which covers both A and B shares, was down 26.72 points at 2,365.34 on turnover of ¥57.0 billion ($9.0 billion).

The key index is close to a 15-month low of 2,363.95 points reached on 5 July 2010.

China’s economy expanded 9.5% year-on-year in the second quarter of this year, slower than the 9.7% posted in the first quarter and 9.8% in the fourth quarter of 2010.

“With weakness in US and European markets, domestic markets are likely to follow. Added to this, there is also concern about slowing domestic economic growth," said Zhang Gang, an analyst at Central China Securities.

Copper plays also dropped on recent falls in international copper prices and expectations of weak demand amid a slumping global economy.

Jiangxi Copper was down 2.7% at ¥26.46 and Jingcheng Copper plunged 5.7% to ¥13.63.

Shipping-related firms, too, suffered as investors worried about a slowdown in global trade. China Shipping Container Lines shed 1% to ¥2.97, while Shanghai International Port lost 1.3% to ¥3.

The tone was set by see-sawing sessions in the United States and Europe. Bourses opened higher but sank towards the close, with US stocks taking a sharp drop in the last hour of trade to break a three-session run of gains.

The Dow Jones Industrial Average ended 1.61% lower at 11,010.90, while the broader S&P 500 gave up 2.07% to 1,151.06 and the Nasdaq Composite lost 2.17% to 2,491.58.

Stocks came under the shadow of a push in Europe Wednesday on landmark proposals to tax the financial sector, ignoring US opposition in a move also sure to provoke a row with London which fears capital flight from the city.

But the main worry continues to be eurozone debt crisis.

“The biggest event risk on traders’ minds is the German vote on the expanded powers of the EFSF," said IG Markets analyst Ben Potter in Sydney, referring to the European Financial Stability Facility.

“The vote is key and whilst most see this being voted through, markets will remain nervous ahead of it."

On foreign exchange markets, the euro gained on buybacks against other major currencies in Asia.

The euro fetched $1.3608 in Tokyo trade against $1.3536 in New York late Wednesday. The European single unit also rose to ¥104.09 from ¥103.60.

The dollar traded at ¥76.51, little changed from ¥76.53.

World oil prices rebounded in Asian trade on bargain-hunting, but persistent concerns over the faltering US economy and the eurozone debt crisis weighed on sentiment.

New York’s main contract, West Texas Intermediate for delivery in November, turned higher in afternoon trade, rising five cents to $81.26 and Brent North Sea crude for November delivery climbed 26 cents to $104.07.