Asian markets mixed as eurozone fears weigh

Asian markets mixed as eurozone fears weigh

Hong Kong: Asian markets were mixed on Tuesday as optimism over reports that China was in talks to buy huge amounts of Italian bonds were tempered by ongoing concerns about the wider eurozone debt crisis.

The euro clawed back some of the heavy losses it suffered on Monday, when it hit a 10-year low versus the yen, but it remained under pressure as traders stayed risk averse due to a lack of indicators to push it upwards.

Tokyo rose 0.31% by the break, Sydney was 0.59% higher and Singapore added 0.79%.

But Shanghai was 1.38% lower as it played catch-up with Monday’s trade, which saw huge regional losses. Hong Kong and Seoul were closed for public holidays.

Investors are likely to buy back shares following Monday’s sell-off in the absence of additional headlines showing further deterioration of the Greek debt crisis, said Kenichi Hirano, operating officer at Tachibana Securities.

But Greece-related concerns remain, Hirano told Dow Jones Newswires. “Nothing has fundamentally changed," he said.

Dealers took some solace from a report in the Financial Times that Beijing could buy bonds from Italy, which is considered one of the eurozone economies that is in danger of needing a bailout -- following Greece, Portugal and Ireland.

The news that China was “in discussions to purchase Italian debt has calmed the market; remember that China eased European tensions in the past by purchasing Spain’s debt back in January," noted Emma Lawson at National Australia Bank.

The euro was lifted slightly by the news. It fetched $1.3677 in early Asian trade on Tuesday, slightly down from $1.3680 in New York late Monday but well up from the levels near $1.3500 on Monday.

The common European currency was at ¥105.33 against 105.56 in New York late Monday after falling below 104.00 earlier in the day to a new 10-year low.

The dollar Tuesday edged down to ¥77.03 from 77.15.

The Dow saw a late rally to end up 0.63% on the China-Italy report, while the S&P 500 climbed 0.70% and the Nasdaq Composite rallied 1.10%.

The US gains came despite a big sell-off in Asia and Europe on Monday caused by renewed fears that Greece -- which was recently given the green light for a second bailout -- could default on its debt repayments.

Germany’s Economy Minister Philipp Roesler said Monday that Europe could no longer rule out an “orderly default" for Greece, while Der Spiegel said Berlin officials were considering a possible scenario of Athens returning to the drachma if it defaults.

However, the officials denied this.

New York’s main contract, light sweet crude for delivery in October, was up 75 cents to $88.94 per barrel in morning Asian trade, while Brent North Sea crude for October delivery fell 52 cents to $112.25.

Gold was trading at $1,826.00 an ounce at 06:30 am on Tuesday, down from $1,841.20 in late trade Monday.