Wednesday, July 13, 2011

ASIA-Shares look softer on persistent euro debt fears

WELLINGTON: Asian stocks are likely to have another weak session on Wednesday as the euro zone's debt crisis, including a ratings downgrade for Ireland to junk status, keep investors cautious.

Concern has shifted to Italy, the third largest economy in the euro zone, with the second-highest debt to GDP ratio in the group, and also to Spain.

In a bid to contain the crisis euro zone finance ministers have promised cheaper loans, longer maturities and a more flexible rescue fund, but set no deadline and Holland's finance minister said a selective default for Greece was no longer being excluded.

Fanning fears was a decision by ratings agency Moody's to cut Ireland's credit rating to junk status.

U.S. stocks ended lower after a volatile session, as the fiscal problems in Europe and a weak start to TECHNOLOGY [] earnings kept investors from buying.

The main Wall Street indices closed between 0.4 percent and 0.7 percent lower. The CBOE Volatility Index , Wall Street's fear barometer, rose 8 percent.

There was a short-lived bounce for U.S. stocks as the minutes of the Federal Reserve suggested the possibility of more stimulative policies, which previously had been positive for stocks, but concerns about Europe overshadowed.

Asian stocks listed on Wall Street fell 0.8 percent, with global stocks as measured by the MSCI world equity index are also down 0.8 percent.

British stocks were down 1 percent and European shares fell 0.5 percent, at one stage hitting a four month low.

The demand for safety saw the euro at its lowest level against the dollar in four months and hit another record low against the Swiss franc. Conversely gold rose close to its highest ever price as investors sought a safe haven.

Japanese markets, which posted their biggest fall in a month on Tuesday on weaker financial and energy stocks, face another testing session.

Nikkei futures traded in Chicago were 85 points below the last closing level in Osaka. A fall below the index's 200-day moving average of 9,895 may point to a correction over the coming week.

Australian stocks will also likely fall, with share price index futures flat, but at a 28.4 point discount to the underlying S&P/ASX 200 index. ' Reuters

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