Asia stocks fall amid Greek political chaos

May 9, 2012 - 2:55 AM
Japan World Markets

A man walks by the electronic stock board of a securities firm showing Japan's Nikkei 225 index, top left, dropped 127.54 points to 9,054.11 in Tokyo Wednesday, May 9, 2012. Asian stock markets fell Wednesday, spooked by disappointing U.S. corporate earnings and fears that political turmoil in debt-crippled Greece is pushing it closer to financial disaster. (AP Photo/Itsuo Inouye)

BANGKOK (AP) — Asian stock markets fell Wednesday, spooked by disappointing U.S. corporate earnings and fears that political turmoil in debt-crippled Greece is pushing it closer to financial disaster.

Japan's Nikkei 225 index fell 1.5 percent to hit a three-month intraday low of 9,021.20 as traders pulled away from big exporters whose fortunes are partly linked to demand from Europe.

The same went for shares in other export-driven economies such as China and South Korea. Hong Kong's Hang Seng fell 1 percent to 20,284.66 and South Korea's Kospi lost 0.9 percent to 1,950.68.

Australia's S&P/ASX 200 slipped 1.2 percent to 4,262.30 after falling prices for metals hurt mining shares. Benchmarks in mainland China, Singapore and Taiwan also fell.

Markets have been increasingly volatile since Greek voters last weekend rejected political parties that imposed the deep spending cuts required in exchange for bailout money to keep the country from bankruptcy. On Tuesday, left-wing politician Alexis Tsipras said the country was no longer bound by its promises to cut spending sharply.

But a failure to keep those promises could lead international lenders to cut off rescue funding. That would likely lead Greece to default — and to the exit door of the euro common currency.

"If Greece repudiates the agreement signed by the previous government, the most likely scenario is Greece will default," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "And then all hell will break loose, and Greece will get kicked out of the eurozone. It's like the end of the world for the eurozone."

Prices for most metals fell as the increasingly bleak outlook for the European economy renewed expectations of weak demand. Hong Kong-listed Zijin Mining Group Co., China's largest gold miner, dropped 4.1 percent. Aluminum Corp. of China plummeted 6.8 percent.

Australian mining giants also took hits. Rio Tinto Ltd. dropped 2.4 percent. Uranium miners Paladin Energy and Energy Resources of Australia tumbled 5.9 percent and 5 percent respectively.

But Panasonic Corp. jumped 2.3 percent in Tokyo after Kyodo News agency cited sources at the company as saying it expects to return to profit in the business year ending March 2013. Toyota Motor Corp., which will report annual earnings later in the day, rose 0.3 percent.

In the U.S., stock markets were sent lower by worries about Greece and sagging corporate results.

Wendy's Co. reported first quarter results that missed expectations on higher costs for ingredients like beef and lower-than-expected sales. Casino operator Wynn Resorts reported a drop in first-quarter earnings.

Meanwhile, McDonald's Corp., the world's largest hamburger chain, on Tuesday issued sales figures that missed analyst expectations.

The Dow Jones industrial average closed down 0.6 percent at 12,932.09. The Standard & Poor's 500 index fell 0.4 percent to 1,363.72. The Nasdaq composite index fell 0.4 percent, to 2,946.27.

Benchmark oil for June delivery was down 51 cents to $96.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 93 cents to settle at $97.01 in New York on Tuesday.

In currencies, the euro fell to $1.2971 from $1.3030 late Tuesday in New York.

The dollar fell to 79.73 yen from 79.79 yen.

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