Asian markets mostly lower on new Europe fears

HONG KONG (AFP) – Asian markets tumbled on Tuesday, bringing a recent rally to a juddering halt, as Wall Street and European shares were hit by political concerns in Spain and Italy.

The euro also slumped as Spain’s prime minister was forced to deny corruption claims, while former Italian premier Silvio Berlusconi vowed to throw a spanner in the works of a government austerity drive as his party showed solid gains in polls ahead of a general election.

Tokyo shares dived 1.90 per cent, or 213.43 points, to 11,046.92, while  Seoul slipped 0.77 per cent, or 15.03 points, to 1,938.18 and Sydney shed 0.51 per cent, or 24.8 points, to 4,882.7. Hong Kong tumbled 2.27 per cent, or 536.48 points, to 23,148.53.

Shanghai reversed morning losses and ended up 0.20 per cent, or 4.98 points, at 2,433.13 after the Chinese central bank injected a huge amount of cash into the market to satisfy pre-Lunar New Year holiday demand from traders.

The losses come after several markets approached highs not seen for several months as confidence slowly returns, thanks to an easing of the eurozone debt crisis and a pick-up in the US and Chinese economies.

The news out of Europe hit the euro, which tumbled in New York late on Monday to $1.3503 and 124.28 yen, from $1.3626 and 126.26 yen earlier in the  day in Asia.     In Tuesday afternoon Tokyo forex trade the euro fetched $1.3485 and 124.52  yen. The dollar bought 92.33 yen compared with 92.11 yen in New York late Monday.

The Australian dollar eased to $1.0409 from $1.0444 after the country’s  central bank held interest rates on hold at 3.0 per cent.

On Wall Street the Dow, which ended near a record high on Friday, dropped 0.93 per cent Monday, while the S&P 500 fell 1.15 per cent and the Nasdaq slipped 1.51 per cent.

In Europe there were heavy losses on all the main indexes Monday, with London’s FTSE 100, Frankfurt’s DAX and the Paris CAC diving between 1.6 per cent and 3.00 per cent. Madrid tumbled 3.77 per cent and Milan slumped 4.50 per cent. On Tuesday the markets were mixed.

Oil prices eased in Asia. New York’s main contract, light sweet crude for delivery in March dropped 15 cents to $96.02 a barrel in the afternoon and Brent North Sea crude for March shed 37 cents to $115.23.

Gold was at $1,673.70 at 0800 GMT compared with $1,665.40 late Monday.