Markets Are Selling Off In Asia

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BANGKOK (AP) — Asian stock markets fell Tuesday, a day after Spain formally requested help to rescue its ailing banks and investors lost hope that an upcoming summit of European leaders would yield meaningful results.Investors already worried about an economic slowdown in the U.S. and China were preparing for the European leaders to disappoint at their June 28-29 gathering in Brussels.

“Another day, another bout of global jitters about the state of the European Union. Overnight we saw equities on both sides of the Atlantic sold off heavily,” Cameron Peacock of IG Markets in Melbourne said in a market commentary.

Japan’s Nikkei 225 index fell 0.8 per cent to 8,664.62 and South Korea’s Kospi was 0.2 per cent lower at 1,822.62. Australia’s S&P/ASX 200 lost 0.5 per cent to 4,008.10. Hong Kong’s Hang Seng, however, was marginally higher at 18,909.84.

Among the most pressing issues at the EU summit will be how to ease some of Greece’s austerity terms now that it has elected a government in favour of the international bailout. Officials in both Athens and Brussels say the current deficit reduction targets are unrealistic. But giving Greece more time to make budget cuts could mean giving it more money to finance its debt. Several European countries are reluctant to do that.

Anxiety over Spain escalated Monday, when the country formally asked other euro countries for rescue loans for its banks, which are reeling from the collapse of the country’s real estate sector.

The amount and terms will be agreed on July 9. Two international audits have estimated that Spain’s banks could need up to €62 billion ($77.7 billion).

Meanwhile, ratings agency Fitch on Monday downgraded Cyprus to “junk” status, prompted by the amount of rescue money that would be needed to bail out its banks which are heavily exposed to the troubled Greek economy. The country’s benchmark stock index crashed by 7.2 per cent to 145.76 points on the downgrade.

Stocks on Wall Street were rattled Monday by Spain’s request for a loan for its banks. The Dow Jones industrial average fell 1.1 per cent to close at 12,502.66. The Standard & Poor’s 500 index fell 1.6 per cent to 1,313.72. The Nasdaq composite fell 1.9 per cent to 2,836.16.

Benchmark crude was up 14 cents to $79.35 in electronic trading on the New York Mercantile Exchange. The contract fell 55 cents to close at $79.21 in New York on Monday.

In currencies, the euro rose to $1.2516 from $1.2495 late Monday in New York. The dollar rose slightly to 79.72 yen from 79.68 yen.

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