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Asian stocks fall on fears over European crisis
Asian stocks fall as investors grow more fearful European leaders can find way out of crisis
By The Associated Press

HONG KONG (AP) ' Asian stocks tumbled Friday as investors grew increasingly pessimistic that European leaders would conclude a crucial summit without finding a solution radical enough to fix the continent's debt crisis.

Crude oil fell to near $98 while the dollar strengthened against the euro but weakened versus the yen.

Japan's Nikkei 225 fell 1.6 percent to 8,526.69 as the government said the economy grew slightly less in the third quarter. South Korea's Kospi lost 1.9 percent to 1,875.81 and Hong Kong's Hang Seng shed 2.6 percent to 18,605.92.

Benchmarks in Australia, Singapore, Taiwan and India also fell.

Mainland Chinese shares fell less than other Asian markets after inflation data for November fell to a lower than expected 4.2 percent, giving officials more wiggle room to ease credit to support growth in the economy. The benchmark Shanghai Composite Index dropped 0.6 percent to 2,315.24.

Germany and France, the two biggest economies in the eurozone, had hoped to persuade all 27 members of the European Union to back a change to the EU treaty that would impose tight fiscal rules on its members ' a modification thought necessary to extricate the region from its debt crisis.

But after a late night of negotiations, Herman Van Rompuy, president of the European Council, announced Friday in Brussels a new treaty: one that will include the 17 eurozone states plus six other EU countries ' not all 27 EU members.

The news follows disappointments from the day before, including comments by European Central Bank President Mario Draghi on Thursday that the bank had no immediate plans for a large-scale purchase of government bonds, which would have kept down the borrowing costs of weak countries like Italy and Spain.

Investors had been counting on such a move to help ease the region's debt crisis.

"Without the ECB's active participation in purchasing sovereign debt in Europe, there is no way you can solve the current crisis, and so the market was really disappointed," said Francis Lun, managing director of Lyncean Holdings, a Hong Kong-based investment holding company. "American stock markets fell sharply and the contagion spread to Asia."

European leaders will hunker down Friday for a second day of negotiations.

"Markets regard the summit as a final chance to save the euro," strategists at Credit Agricole CIB said in a research note.

In New York on Thursday, the Dow Jones industrial average dropped 1.6 percent, to close at 11,997.70. The Standard & Poor's 500 index ended 2.1 percent lower at 1,234.35. The Nasdaq lost 2 percent to close at 2,596.38.

Benchmark oil for January delivery fell 20 cents to $98.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.15 to end Thursday at $98.34.

In currencies, the euro weakened to $1.3333 from $1.3340 late Thursday in New York. The dollar weakened to 77.57 yen from 77.67 yen.

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