Asia stocks weighed down by Europe debt woes
Asia stocks fall as Cyprus bank concerns, Italian political uncertainty weigh on markets
BANGKOK (AP) -- Renewed jitters about the debt crisis in Europe sent Asian stock markets lower Thursday.
Banks in Cyprus are due to open later Thursday for limited banking only after being shut for nearly two weeks as an emergency loan was being pieced together to prevent the nation's financial sector from collapsing.
The agreement reached late Monday with international lenders gives Cyprus a 10 billion euro ($12.9 billion) bailout but forces losses on depositors with more than 100,000 euros in the country's two largest banks.
Evan Lucas of IG Markets in Melbourne said the deal has sparked fears it may be repeated in other European nations that faced similar circumstances. In an email commentary, he said investors saw the deal "as a monster in the shadows for banks in Portugal, Spain and Italy" since it requires depositors — not the public or its tax contributions — to take the pain.
Japan's Nikkei 225 index tumbled 1.6 percent to 12,300.42. Hong Kong's Hang Seng lost 1.1 percent to 22,214.61. South Korea's Kospi slipped 0.2 percent at 1,990.04. Australia's S&P/ASX 200 lost 0.2 percent to 4,984.30.
Investors are waiting to see the reaction later Thursday, when Cypriot banks open their doors. Authorities have been putting measures in place to prevent a rush of euros out of the country's banks. Cash withdrawals will be limited to 300 euros ($383) per person each day, and no checks will be cashed.
Peter Lai of DBS Vickers Securities in Hong Kong said he was expecting a "disastrous phenomenon" in Cyprus when banks reopen.
"We also expect there'll be some kind of bank run. So lots of people are trying to get their cash back and this undoubtedly will be some kind of bad impact on the Cyprus banking system and people believe that or they think that this may affect the euro system," he said.
Meanwhile, in Italy, a leading political party failed in its attempt to form a new government. The stalemate has raised concerns that the country will be unable to manage its deep debts. Italy is the third-largest economy of the 17 countries that use the euro.
Financial stocks across Asia slumped. Japan's Mizuho Financial Group dropped 2.4 percent. Agricultural Bank of China fell 2.9 percent in Hong Kong.
In Australia, Newcrest Mining plummeted 7.9 percent after the company said its gold production target for the 2012-13 fiscal year would not be reached.
Wall Street stocks closed mostly lower Wednesday on Europe worries. The Dow Jones industrial average dropped 0.2 percent to close at 14,526.16. The S&P 500 fell less than 0.1 percent to close at 1,562.85. The Nasdaq composite index rose 0.1 percent to 3,256.52.
Benchmark oil for May delivery was up 7 cents to $96.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 24 cents to close at a five-week high of $96.68 per barrel on the Nymex on Wednesday.
In currencies, the euro rose to $1.2783 from $1.2774 late Wednesday in New York. The dollar fell to 94.06 yen from 94.38 yen.
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