Storify Feed Feedburner Facebook Twitter Flickr Youtube

ROS Lboard

Asian markets, euro tumble on Spain woes

July 23, 2012

HONG KONG: Asian markets tumbled and the euro slumped to its lowest level against the yen in almost 12 years today as Spain’s debt crisis deepened.

With borrowing costs hitting the danger levels that forced Ireland, Greece and Portugal to seek a bailout, investors are concerned that Spain, one of the eurozone’s biggest economies, will also have to call for help.

Tokyo fell 1.35%, Hong Kong tumbled 2.51%, Sydney slipped 1.28%, Seoul lost 1.97% Shanghai was 1.25% off.

Market players were spooked by reports that one of Spain’s indebted regions, Valencia, would ask the central government for financial support, while officials in Madrid warned that the economy would likely contract through 2013.

The worries sent Spanish borrowing costs to a euro-era record level, with the 10-year bond yield climbing to 7.24%, while the euro fell to 94.91 against the yen, its lowest level since November 2000.

“It’s not the kind of situation where fears are just going to fade away, since the required amount of aid that Spain will need is likely to mount given the increasing needs of local governments,” Rakuten Securities senior market analyst Masayuki Doshida told Dow Jones Newswires.

European leaders on Friday agreed to grant Spain’s banks bailout cash of up to 100 billion euros but despite this there are fears that the country will need extra cash to help service its debts.

The soaring yields on 10-year bonds come as unemployment sits at 24% and the government tries to implement further austerity measures.

Without better economic news the country could lose access to debt markets, leading it to a bailout, which some analysts have said could cost up to US$500 billion.

In late morning Tokyo trade the euro, which also tumbled last Friday amid the Spanish woes, bought 95.03 yen, down from 95.38 late Friday in New York.

It was also down at two-year lows of US$1.2120, from US$1.2152 last Friday. The dollar bought 78.33 yen, compared with 78.48 yen.

The huge swings on currency markets came as Japan’s Prime Minister Yoshihiko Noda held talks with the central bank chief Masaaki Shirakawa Monday morning, reports said as the yen rose amid European debt woes.

On oil markets New York’s main contract, light sweet crude for September delivery, shed 65 US cents to US$91.18 a barrel in morning trade and Brent North Sea crude for delivery in September was down 64 US cents to US$106.19.

Gold was at US$1,579.45 an ounce at 0230 GMT, from US$1,581.20 last Friday.

- AFP


Comments

Readers are required to have a valid Facebook account to comment on this story. We welcome your opinions to allow a healthy debate. We want our readers to be responsible while commenting and to consider how their views could be received by others. Please be polite and do not use swear words or crude or sexual language or defamatory words. FMT also holds the right to remove comments that violate the letter or spirit of the general commenting rules.

The views expressed in the contents are those of our users and do not necessarily reflect the views of FMT.

Comments