Asian Shares Fall on Euro Zone Fears, G20 Eyed

By webadmin on 03:21 pm Feb 15, 2013
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Danny McCord & JG

Asian stocks mostly fell and the euro eased on Friday as data showed the euro zone slipped deeper into recession at the end of last year, while markets await the start of a Group of 20 meeting in Russia.

Bucking the trend, Indonesia’s benchmark index capped an impressive week by climbing 0.43 percent on Friday, adding 21.11 points to close at 4,609.79.

It was the fifth straight day that the Jakarta Composite Index closed at a record high.

A total of 7.09 billion shares valued at Rp 4.88 trillion ($505 million) were traded on Friday, according to Bloomberg data. Stocks in positive territory outnumbered those in the red by 146 to 118. The JCI was up 2.3 percent for the week.

Tokyo fell 1.18 percent, or 133.45 points, to 1,1173.83 hours before G20 finance ministers gather for a weekend summit where Japan’s controversial monetary policy will figure prominently.

Seoul was flat, edging up 1.57 points to 1,981.18, while in the afternoon Hong Kong was down 0.10 percent.

Sydney finished flat, nudging down 3.0 points to 5,033.9, although it is still sitting around 34-month highs.

Wellington ended 1.00 percent lower, sliding 42.46 points to 4,196.74.

Shanghai and Taipei are closed for the Lunar New Year Holiday.

Investor confidence was hit by news that recession in the 17-nation euro zone deepened sharply in the final three months of 2012 as the debt crisis continued to sap growth.

The euro zone economy shrank 0.6 percent in the three months to December, which compared with a contraction of 0.1 percent in the previous quarter, according to official data.

In the second quarter of 2012, it contracted 0.2 percent, meaning that the recession has now lasted three quarters. The euro zone had meanwhile registered zero growth in the first quarter of last year.

Analysts said the latest figures were worse than expected, with the major economies, including powerhouse Germany, also dragged down.

For 2012 as a whole, the euro zone economy contracted 0.5 percent and the wider 27-member European Union by 0.3 percent.

“We’re sort of desensitized to a certain extent to a proper knee-jerk reaction, but given soft leads from Europe, it’s led to declines in Asia,” said Jason Hughes, head of premium client management at IG Markets in Singapore.

On currency markets, the euro weakened to $1.3347 and 123.28 yen, from $1.3385 and 124.10 yen in New York.

The dollar also weakened to 92.75 yen from 92.87 yen, with the Japanese unit pulling back some of its recent losses ahead of the G20 meeting in Moscow that is expected to focus on a growing currency row.

Finance ministers and central bankers from the Group of 20 leading economies will meet from Friday as Tokyo comes under attack, mostly from Europe, over its monetary policy of big spending, which has pushed down the yen.

The Bank of Japan, under pressure from the new government, last month unveiled a plan for unlimited monetary easing and a target for 2 percent inflation.

The moves, which had been expected, added to the yen’s weakness and sparked charges of manipulation from around the world and fueled fears of a currency war where rival nations drive down their currencies to gain a trade advantage.

On Thursday, Japan’s Asahi daily, citing a copy of a draft joint statement, reported that the G20 would warn members off any competitive currency devaluations.

“Ahead of the G20 meeting, caution is emerging over the yen’s outlook,” Hiroichi Nishi, general manager of equity at SMBC Nikko Securities, told Dow Jones Newswires.

Wall Street provided an anaemic lead, despite two giant mergers, including that of American Airlines and US Airways to create the largest American carrier.

Heinz also made a shock announcement that billionaire Warren Buffett’s investment firm Berkshire Hathaway would partner 3G Capital to buy the ketchup maker in a $28 billion deal.

The Dow edged down 0.07 percent, the S&P 500 edged up 0.07 percent and the Nasdaq nudged 0.06 percent higher.

Oil prices were mixed, with New York’s main contract, light sweet crude for delivery in March gaining three cents to $97.34 a barrel, while Brent North Sea crude for April delivery shedding three cents to $117.97.

Gold was at $1,632.80 at 0600 GMT, compared with $1,643.25 late on Thursday.