Asia stocks fall after Greece aid delayed

By PAMELA SAMPSON,AP Business Writer Updated at 2012-11-21 06:24:01 +0000


BANGKOK (AP) — Asian stock markets were mostly lower Wednesday, shedding morning gains after European Union officials failed to release a loan payment to debt-mired Greece and postposed further action until next week.

European finance ministers adjourned a meeting in Brussels without granting Greece the next installment of an emergency bailout loan that has been on hold for months. The €31.5 billion ($40 billion) loan is needed so that Athens can pay its bills and avoid running out of cash.

The aid is being delayed until officials can resolve a dispute over whether to give Greece an extra two years to get to a point where it can independently raise funds on bond markets. Greece has been locked out of the international long-term debt market since 2010 and thus relies on rescue loans.

The reform program attached to the bailout was to steadily reduce Greece's debt to 120 percent of its annual gross domestic product by a 2020 deadline. But some officials say the deadline may have been too ambitious and that Greece needs two more years.

South Korea's Kospi fell 0.4 percent to 1,882.62 after a higher open. Meanwhile, Australia's S&P/ASX 200 fell further into negative territory, down 0.3 percent at 4,371.10. Benchmarks in Thailand, New Zealand and Taiwan also were lower.

But Japan's Nikkei 225 index rose 0.4 percent to 9,178.05, with export shares enjoying the benefits of a weakened yen. Hong Kong's Hang Seng added 0.2 percent to 21,272.48. Benchmarks in India and the Philippines also rose.

Mainland China's Shanghai Composite Index briefly dipped below 2,000, an important psychological mark. The benchmark hasn't gone above 2,100 since July 6.

The benchmark "has been hovering around 2,000 for such a long time that investors have lost interest," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "The weakness in China's market is dragging down the Hong Kong market."

The losses reflected disappointment among investors hoping to see changes in how the stock market is run now that China has new leaders. But reforms have so far not materialized.

"There has been too much resistance to cleaning up the malpractice" in mainland Chinese markets, Lun said. "Investors have lost confidence."

Among individual stocks, Japanese snack food maker Calbee dropped 3.7 percent after announcing the recall of millions of bags of potato chips due to possible contamination with glass fragments.

Wall Street stocks finished roughly flat Tuesday after a warning from the Federal Reserve chairman about the "fiscal cliff" of tax increases and government spending cuts set to take effect Jan. 1.

The Dow Jones industrial average fell 0.1 percent to 12,788.51. The Standard & Poor's 500 index rose 0.1 percent to 1,387.81. The Nasdaq composite index inched up to 2,916.68.

In a speech in New York on Tuesday, Bernanke urged Congress and the Obama administration to strike a budget deal to avert the combination of tax increases and spending cuts that will automatically take effect in January if nothing is done.

"This overshadowed some positive economic data which came in the form of better-than-expected housing starts," said Stan Shamu of IG Markets in Melbourne in a market commentary.

Benchmark oil for January delivery was down 1 cent at $86.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.53 to close at $86.75 a barrel on Tuesday, falling sharply after signs that Israel and Hamas are close to putting a halt to fighting that has lasted nearly a week.

In currencies, the dollar rose to 81.79 yen from 81.71 yen late Tuesday in New York. The euro fell to $1.2747 from $1.2807.