Asian stocks soft, euro slips on EU debt woes
Thursday, 13 May 2010
SINGAPORE, May 12 (Reuters): The euro slipped Wednesday on nagging worries about festering euro zone debt problems despite a $1 trillion rescue package unveiled this week, which fuelled a short-lived rally in global stocks.
Sterling held its overnight gains after Conservative party leader David Cameron took over as British prime minister after securing a power-sharing agreement between his centre-right party and the smaller Liberal Democrats.
In Tokyo, the Nikkei average edged up 0.5 per cent, but gains were capped by continued foreign selling of Japanese stocks on concerns that the euro zone relief package did little to resolve the region's longer-term debt problems.
"Since the start of this month, foreigners have really been selling Japanese stocks, partly because Japanese markets were closed for holidays and foreign markets fell during that time, and partly because the Greek debt crisis really worsened," said Hideyuki Ishiguro, a strategist at Okasan Securities.
"At this point, I don't think a lot of this money is flowing into other Asian share markets. It's probably going into US Treasury bonds and gold as part of a shift from riskier assets."
Orders for Japanese stocks placed through 10 foreign securities houses before the start of trade Wednesday showed selling for a fifth straight day.
MSCI's index of Asia-Pacific shares outside Japan was little changed, a day after falling just over 1 per cent, though most major markets in the region were weaker, following modest losses on Wall Street.
Benchmark indexes in Hong Kong and South Korea fell by as much as 0.6 per cent, but Australia advanced more than 1 per cent as its federal budget boosted banks.
On Monday, the MSCI ex-Japan index climbed 3.6 per cent -- its biggest single-day percentage gain since May 2009 -- fueled by hopes that the massive rescue package would prevent Greece's debt crisis from spreading to other countries in the euro zone and possibly sparking another global credit crunch.
But the global rally quickly fizzled Tuesday as worries resurfaced that Greece and other heavily-indebted euro zone members will not be able to deliver on promises of deep spending cuts.
The euro was trading around $1.2636, down 0.2 per cent from late US trade, but off a 14-month low of $1.2510 hit last week.
One near-term downside target for the euro may be around $1.2580, near Friday's low, one trader said.
Sterling hovered near $1.4898 after rising above $1.5000 Tuesday.
Sterling held its overnight gains after Conservative party leader David Cameron took over as British prime minister after securing a power-sharing agreement between his centre-right party and the smaller Liberal Democrats.
In Tokyo, the Nikkei average edged up 0.5 per cent, but gains were capped by continued foreign selling of Japanese stocks on concerns that the euro zone relief package did little to resolve the region's longer-term debt problems.
"Since the start of this month, foreigners have really been selling Japanese stocks, partly because Japanese markets were closed for holidays and foreign markets fell during that time, and partly because the Greek debt crisis really worsened," said Hideyuki Ishiguro, a strategist at Okasan Securities.
"At this point, I don't think a lot of this money is flowing into other Asian share markets. It's probably going into US Treasury bonds and gold as part of a shift from riskier assets."
Orders for Japanese stocks placed through 10 foreign securities houses before the start of trade Wednesday showed selling for a fifth straight day.
MSCI's index of Asia-Pacific shares outside Japan was little changed, a day after falling just over 1 per cent, though most major markets in the region were weaker, following modest losses on Wall Street.
Benchmark indexes in Hong Kong and South Korea fell by as much as 0.6 per cent, but Australia advanced more than 1 per cent as its federal budget boosted banks.
On Monday, the MSCI ex-Japan index climbed 3.6 per cent -- its biggest single-day percentage gain since May 2009 -- fueled by hopes that the massive rescue package would prevent Greece's debt crisis from spreading to other countries in the euro zone and possibly sparking another global credit crunch.
But the global rally quickly fizzled Tuesday as worries resurfaced that Greece and other heavily-indebted euro zone members will not be able to deliver on promises of deep spending cuts.
The euro was trading around $1.2636, down 0.2 per cent from late US trade, but off a 14-month low of $1.2510 hit last week.
One near-term downside target for the euro may be around $1.2580, near Friday's low, one trader said.
Sterling hovered near $1.4898 after rising above $1.5000 Tuesday.