Spanish debt downgrade weighs on euro, Asian stocks
Friday, 30 April 2010
HONG KONG, Apr 29 (Agencies): Asian markets suffered from the eurozone debt crisis Thursday after Spain's credit rating was downgraded, while the euro remained stuck near one-year lows.
The International Monetary Fund said confidence in the entire 16-nation euro area was at risk, while Greece's prime minister said the European Union "must prevent a fire" from engulfing the regional and world economy.
Global markets were sent reeling after Standard & Poor's downgraded its credit rating for Greece to "junk" status Tuesday, while Portugal also saw its rating lowered.
Hopes for a bailout running up to 120 billion euros (158 billion dollars) were raised Wednesday as Germany signalled it was more willing to help Greece, with Chancellor Angela Merkel saying rescue talks must be accelerated.
Greece has said it needs emergency loans from the EU and IMF by May 19 to avoid defaulting on its debts.
But Asian investors remained wary, with Hong Kong's stock market falling 0.11 per cent, Sydney 0.65 per cent off and Seoul down 0.60 per cent. Tokyo was closed for a public holiday.
Asia ignored a rally on Wall Street sparked by news that the Federal Reserve looks unlikely to raise interest rates in the very near future after keeping borrowing costs ultra-low Wednesday.
Asian fears were stoked after the credit rating of Spain, whose economy is five times the size of Greece's, was downgraded by S&P to "AA" from "AA+" while its outlook was lowered to negative.
Deputy Prime Minister Maria Teresa de la Vega said the Spanish government was "adopting all the measures needed to meet our commitments" to bring the swollen public deficit down.
But IMF managing-director Dominic Strauss-Kahn struck an ominous note, warning: "It is the confidence in the whole zone that is at stake."
Economist Ben May at research firm Capital Economics in London said: "The downgrade of Spanish government debt by S&P is another alarming sign that the effects of the Greek crisis are spreading."
The news weighed on the euro, which hovered near one-year lows against the greenback at 1.3203 dollars, from 1.3201 in New York late Wednesday.
"Euro-dollar is getting hammered... we're quite prepared for poor euro performance," Thio Chin Loo, senior currency analyst of BNP Paribas in Singapore, said.
The dollar bought 93.89 Japanese yen in Asian trade Thursday from 94.05.
Herman Van Rompuy, the European Union's president, has convened an emergency summit of eurozone leaders for around May 10 on the debt crisis.
Shanghai share prices were flat but Singapore rose 0.49 per cent.
The International Monetary Fund said confidence in the entire 16-nation euro area was at risk, while Greece's prime minister said the European Union "must prevent a fire" from engulfing the regional and world economy.
Global markets were sent reeling after Standard & Poor's downgraded its credit rating for Greece to "junk" status Tuesday, while Portugal also saw its rating lowered.
Hopes for a bailout running up to 120 billion euros (158 billion dollars) were raised Wednesday as Germany signalled it was more willing to help Greece, with Chancellor Angela Merkel saying rescue talks must be accelerated.
Greece has said it needs emergency loans from the EU and IMF by May 19 to avoid defaulting on its debts.
But Asian investors remained wary, with Hong Kong's stock market falling 0.11 per cent, Sydney 0.65 per cent off and Seoul down 0.60 per cent. Tokyo was closed for a public holiday.
Asia ignored a rally on Wall Street sparked by news that the Federal Reserve looks unlikely to raise interest rates in the very near future after keeping borrowing costs ultra-low Wednesday.
Asian fears were stoked after the credit rating of Spain, whose economy is five times the size of Greece's, was downgraded by S&P to "AA" from "AA+" while its outlook was lowered to negative.
Deputy Prime Minister Maria Teresa de la Vega said the Spanish government was "adopting all the measures needed to meet our commitments" to bring the swollen public deficit down.
But IMF managing-director Dominic Strauss-Kahn struck an ominous note, warning: "It is the confidence in the whole zone that is at stake."
Economist Ben May at research firm Capital Economics in London said: "The downgrade of Spanish government debt by S&P is another alarming sign that the effects of the Greek crisis are spreading."
The news weighed on the euro, which hovered near one-year lows against the greenback at 1.3203 dollars, from 1.3201 in New York late Wednesday.
"Euro-dollar is getting hammered... we're quite prepared for poor euro performance," Thio Chin Loo, senior currency analyst of BNP Paribas in Singapore, said.
The dollar bought 93.89 Japanese yen in Asian trade Thursday from 94.05.
Herman Van Rompuy, the European Union's president, has convened an emergency summit of eurozone leaders for around May 10 on the debt crisis.
Shanghai share prices were flat but Singapore rose 0.49 per cent.