Eurozone crisis overshadows Asian markets

Eurozone crisis overshadows Asian markets

Hong Kong: Asian stocks mostly slipped on Wednesday as the eurozone crisis cast a shadow worldwide, Chinese manufacturing data raised expectations of a rate hike and Australia’s economy showed signs of slowing.

Tokyo’s Nikkei index was off by 0.05% in the morning, Sydney’s S&P/ASX 200 index was down by 0.34%, Hong Kong’s Hang Seng fell 0.22% and Shanghai’s Composite lost 0.54%.

Seoul’s Kopsi index rose however by 0.22% as the mood there showed signs of recovering after last week’s deadly artillery fire on the Korean peninsula.

Asian markets were partly responding to Wall Street, where the view of Europe’s debt crisis appeared increasingly pessimistic and traders also faced mixed indicators on the state of the US recovery.

“Confidence in the European banking system has fallen rapidly and it appears drastic further action will be required by the European Union and the European Central Bank to avert a crisis," RBS Foreign Exchange Strategist Greg Gibbs told Dow Jones Newswires in Sydney.

“At this stage it’s easier to see contagion spreading and risk appetite declining further globally before this gets better."

In New York the blue-chip Dow Jones Industrial Average fell 0.42%, the broader S&P 500 index dropped 0.61% and the tech-rich Nasdaq retreated 1.07%.

The euro dipped below $1.30 for the first time in more than two months on Tuesday as investors fretted that the debt contagion could spread beyond Ireland to Portugal, Spain or even Italy.

The single European currency bought $1.2997 in Asian trade, a shade up from 1.2985 in New York on Tuesday, and 108.68 yen compared with 108.62.

The greenback bought ¥83.61 compared with 83.63.

Meanwhile expectations of an imminent Chinese rate hike were heightened by official data showing that manufacturing activity on the mainland accelerated in November despite the rising cost of raw materials.

The manufacturing purchasing manager’s index rose to 55.2 in November from 54.7 in October, according to the China Federation of Logistics and Purchasing.

A reading above 50 indicates expansion while a reading below 50 shows contraction.

“Despite the absence of negative news in recent days, worries about China’s further monetary policy tightening are still present in the market and are hurting investor confidence," said analyst Wei Daoke of Shenyin Wanguo Securities.

Australian sentiment was also dented by worse-than-expected third quarter growth data, which suggested a slow-down in the resource-driven economy.

Growth for the quarter to September was 0.2%, while the annual growth figure was downgraded to 2.7% from 3.3%.

Macquarie analyst Brian Redican said the result showed how a “bit of bad weather" in the mining sector could deeply impact Australia’s growth.

“If there’s any slippage in mining investment or mining construction then you do get a very weak outcome," Redican said. “Suddenly, there’s nothing else to support growth." Crude oil prices rose in Asian trade as freezing temperatures and heavy snowfall in Europe boosted demand for heating fuel, analysts said.

New York’s main contract, light sweet crude for January delivery, gained one cent to 84.12 dollars a barrel. Brent North Sea crude for January advanced 17 cents to 86.09 dollars.

Gold opened at $1,386.00-1,387.00 an ounce in Hong Kong, up from Tuesday’s close of $1,369.00-1,370.00.