Global markets rout hits Asia

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HONG KONG: Mounting fears about tattered government finances in Europe drove the euro down and hammered stock markets across Asia yesterday following New York’s worst finish since November.The European currency sank to an eight-month low with risk-averse investors bolting for the safe-haven dollar, despite concern that US jobs data out later in the day would flag enduring weakness in the world’s largest economy.

“What we’re seeing is a wave of panic selling,” said Francis Lun, general manager of Fulbright Securities in Hong Kong, where the Hang Seng index tumbled below the key 20,000 level in early trade for the first time in five months.

The euro dropped to US$1.3670 at one point, the lowest level since late May 2009.

In Tokyo afternoon trade it stood at 1.3707, from 1.3726 in New York late on Thursday.

“European debt concerns have strengthened the US dollar and this has stoked concerns that… risk aversion may heighten further,” Min Sang-Il of E Trade Securities in South Korea told Dow Jones Newswires.

The Hang Seng was down 2.91 per cent, or 592.31 points, at 19,749.33 by the break, its worst since Sept 3.

Singapore’s Straits Times Index was down 1.95 per cent.

“With the selloff on Wall Street, traders should enter today’s market with a good crash helmet,” CIMB analysts in Singapore said.

Tokyo plummeted 2.89 per cent, or 298.89 points, to end at 10,057.09.

The Nikkei’s dive came despite a 1.06 per cent rise in Toyota shares after the recall-plagued carmaker lifted its earnings forecast.

Seoul ended 3.05 per cent, or 49.30 points, down at 1,567.12.

In Australia, the S P/ASX200 plunged 2.32 percent to end at 4,514.3. Miner BHP Billiton fell 3.5 per cent to A$39.55 and ANZ Bank was down 2.4 per cent at 20.90.

The European currency was hit by increased fears that crisis-hit EU members such as Spain and Portugal could be in for the same troubles as debt-ridden Greece.

It was also weighed by the European Central Bank’s decision to maintain record-low interest rates.

“A spike in risk aversion following renewed concerns about the health of European sovereigns saw equity markets pummelled,” NAB Capital analysts wrote in a note to clients.

Stocks in Spain and Portugal were hammered, while London’s benchmark FTSE 100 index plunged 2.17 per cent to close at 5,139.31 points.

“It’s very bad sentiment for the euro, it’s a sell-off for the euro definitely,” said Lee Sue Ann, a treasury economist with Singapore’s United Overseas Bank.

And Ben Potter, IG Markets strategist in Australia, said: “It seems the problems in Europe are only deepening.” The shockwaves across Asia came after Wall Street’s Dow Jones index dived 2.61 per cent to end at 10,002.18, its lowest since November, after a brief dip below 10,000.

In advance of yesterday’s Labour Department survey of non-farm payrolls, weak data on US jobless claims combined with heightened fears of debt problems in European Union countries to drive investors away from equities.

Shanghai was down 1.86 per cent at 2,939.69.

“Jittery investors are now focused on the external factors, another whammy for the market after domestic credit tightening concerns were priced in during the recent correction,” Guotai Junan Securities analyst Ci Weixiang said.

Banks led the decline after recent moves by Chinese authorities to rein in lending, while miners were also down with lower commodity prices worldwide.

Oil reversed earlier losses as dealer made the most of cheaper prices.

New York’s main contract, light sweet crude for March delivery, rose 27 cents to US$73.41 a barrel.

The benchmark had plunged nearly four dollars in New York Thursday.

Brent North Sea crude was up 13 cents to US$72.26 after dropping US$3.79 in London.

“The rise in US jobless claims generated concerns about the outlook for the US economy,” commodity analysts from the Commonwealth Bank of Australia said in a report.

Data Thursday showed seasonally adjusted claims rose to 480,000 in the week ending Jan 30, up 8,000 from the previous week’s upwardly revised 472,000.

Most analysts expect Friday’s bigger Labour Department report will show US unemployment held steady at 10 per cent and the economy created a meagre 15,000 jobs, after a loss of 85,000 in December.

Hong Kong gold opened at 1,064.00-1,065.00 US dollars an ounce, down from Thursday’s close of 1,105.50-1,106.50. — AFP