Asia stocks fall amid political turmoil in Greece

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Associated Press

Posted on May 16, 2012 at 1:01 AM

Updated Wednesday, May 16 at 1:32 AM

BANGKOK (AP) — Asian stocks dived Wednesday after a failure by Greece's political leaders to form a coalition government set the stage for new elections next month, keeping Europe's debt crisis center stage.

Japan's Nikkei 225 index dropped 1.5 percent to 8,771.60 amid discouraging economic news. Core private-sector machinery orders fell 2.8 percent in March, the first drop in three months, Japan's Cabinet Office said.

Elsewhere, investors remained focused on the turmoil in Greece. Hong Kong's Hang Seng slid 2.8 percent to 19,346.54 and South Korea's Kospi fell 2.3 percent to 1,855.13. Australia's S&P/ASX 200 lost 2.3 percent to 4,167.50 amid sliding commodities prices.

Newly elected Greek leaders — hotly divided over how to resolve the country's economic crisis — failed Tuesday to form a new government. That means new elections must be held in June.

Some investors fear a win by parties that oppose unpopular austerity measures necessary for Greece to qualify for urgently needed bailout money. Without the money, the country would likely default on its debt and leave the euro common currency.

"The Greek crisis will continue to frustrate markets, keeping sentiment under pressure," analysts at Credit Agricole CIB in Hong Kong wrote in an email.

Blue-chip shares across sectors throughout Asia registered sharp losses. South Korean electronics giant Samsung Electronics Co. shed 5.6 percent and Hyundai Motors Co. fell 3 percent. In Japan, Toyota Motor Corp. lost 2.5 percent. Nomura Holdings Inc. lost 1.8 percent.

Shares of major Chinese shipping companies plummeted amid fears of weakness in Europe, a critical export market. Hong Kong-listed China Shipping Container Lines Co. plunged 7.5 percent. China COSCO Holdings Co. dropped 4.5 percent.

"The Chinese shipping sector is down sharply and continues to downtrend," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "The market is not good right now, but I expect a technical rebound is coming."

A comeback was likely among property and insurance shares, he said. In the meantime, those sectors took big hits. Hong Kong-listed Evergrande Real Estate Group Ltd. lost 4.4 percent. China Life Insurance Co., the country's biggest life insurer, tumbled 3.4 percent.

Falling commodities prices hurt Australia's mining sector. BHP Billiton Ltd., the world's largest mining company, lost 4 percent. Rio Tinto Ltd. was down 3.6 percent. Paladin Energy Ltd. tumbled 9 percent.

Europe's latest political impasse cast a gloom over financial markets Tuesday. The euro plunged, and the Dow Jones industrial average extended a slide that has wiped out nearly 5 percent of its value in two weeks.

The Dow closed down 0.5 percent at 12,632. The Standard & Poor's 500 index finished down 0.6 percent at 1,330.66. The Nasdaq composite index fell 0.3 percent to 2,893.76.

Better news about the U.S. economy didn't help sentiment much. A measure of manufacturing activity in New York state jumped in May, reversing a large drop in April. Measures of new orders and employment rose.

And homebuilder confidence reached its highest level in five years in May, according to the National Association of Home Builders/Wells Fargo housing market index. Builders reported greater sales and higher traffic from prospective buyers.

Benchmark oil fell $1.23 to $92.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 80 cents Tuesday to finish at $93.98 per barrel in New York — oil hasn't finished that low since Dec. 19.

In currencies, the euro fell to $1.2717 from $1.2734 late Tuesday in New York. The dollar rose to 80.36 yen from 80.27 yen.

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