BLBG: Asia Stocks, Euro Decline on Greece Debt Concerns; SET Tumbles
By Clyde Russell and Yoshiaki Nohara
April 23 (Bloomberg) -- The euro fell to near the lowest in a year against the dollar and Asian stocks declined as concern about Greece’s deficit added to pressure on Group of 20 finance ministers meeting in Washington to help stem the crisis.
The euro fell to as low as $1.3202 in Tokyo, the weakest since April 30 last year, from $1.3295 in New York yesterday. The MSCI Asia Pacific Index lost 0.5 percent to 125.67 at 4:17 p.m. in Tokyo. Thailand’s benchmark SET Index plunged 1.4 percent after five grenade blasts killed three people and injured 75 at anti-government protests in Bangkok’s financial district. The Stoxx Europe 600 was little changed and futures decreased 0.3 percent for the Standard & Poor’s 500 Index.
The Group of 20 industrial and developing nations meets today and is expected to discuss Greece amid concern the Euro member will be forced to restructure its debt. Greek bonds and stocks plunged yesterday, dragging down European markets, as Moody’s Investors Service cut its rating on Greek debt one notch to A3 and the EU revised the country’s budget deficit higher.
“Chances are G-20 officials will discuss Greece because it could lead to a global financial issue,” said Takashi Kudo, general manager of market information at NTT SmartTrade Inc. in Tokyo. “Markets seem to be mounting pressure on Greece to get a bailout, with the euro weakening. Risk aversion is causing the dollar and yen to be bought.”
The dollar rose against 14 of its 16 major peers before reports forecast to show improving orders for long-lasting goods and new home sales in the U.S.
Emerging Markets
The difference in yield to own bonds in developing nations instead of Treasuries climbed 2 basis points to 2.45 percentage points yesterday, according to the EMBI Plus Index compiled by JPMorgan Chase & Co. It has widened from 2.31 basis points on April 15, the lowest since Dec. 27, 2007.
Hong Kong’s Hang Seng Index sank 0.6 percent. Japan’s Nikkei 225 Stock Average lost 0.3 percent.
Financial companies were the biggest drag on the MSCI Asia Pacific Index amid sovereign debt concerns. Fitch Ratings said yesterday Japan’s swelling debt burden may put pressure on the nation’s sovereign AA-rating.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, dropped 1.4 percent to 501 yen. Commonwealth Bank of Australia fell 1.4 percent to A$58.20, and Woori Finance Holdings Co. lost 0.8 percent to 17,850 won in Seoul.
“Uncertainty surrounding sovereign credit risk is too high, so people are avoiding risk,” said Tomomi Yamashita, a Tokyo- based fund manager at Shinkin Asset Management Co., which oversees the equivalent of $3.81 billion.
Gold Off
Gold, which typically trades inversely to the U.S. currency, declined as the dollar gained on concern about Greece. The metal for immediate delivery fell as much as 0.3 percent to $1,138.70 an ounce before trading at $1.139.75. Silver also dropped, while crude oil traded below $84 a barrel in New York, paring gains for the week, as the stronger dollar curbed demand for commodities.
“The big picture has still got to be a concern of what’s going on in Europe,” said Chad Walls, head of precious metals trading at Fortis Bank in Hong Kong. The Dollar Index, a gauge against six counterparts, gained as much as 0.5 percent.
The EU yesterday lifted its estimate for Greece’s deficit to 13.6 percent of gross domestic product. Ireland overtook the southern European nation as the EU member with the largest deficit, at 14.3 percent.
“There are a number of countries who could easily go down the same path, and the ability for Europe to bail out all of those economies is, I would imagine, quite limited,” said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “A resolution is needed quite quickly. Otherwise, the euro is going to continue to weaken.”
Moody’s lowered Greece’s credit rating to A3 from A2, four grades above junk, while credit-default swaps tied to the debt climbed to a record 644 basis points, CMA DataVision prices showed. Greece is prepared to ask euro-region governments for a bridge loan, a Greek government official said, as debt worth $11.3 billion comes due next month and borrowing costs surge to the highest since 1998.
To contact the reporters on this story: Clyde Russell in Singapore at crussell7@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net
