HONG KONG: Asian markets fell Wednesday and the euro fell to a newfour-month low on news Greece will go to the polls again aftertalks to form a coalition failed, stoking fears it will exit theeurozone. The developments came as France's new pro-growth President FrancoisHollande held his first talks with German Chancellor Angela Merkel,the main proponent of austerity, to find common ground on tacklingthe crisis. Tokyo closed down 1.12 percent, or 99.57 points, at 8,801.17 whileSydney was 2.36 percent lower, or 100.8 points, at 4,165.5. Seoul closed 3.08 percent lower, easing 58.43 points to 1,840.53. In afternoon trade Hong Kong was 3.28 percent lower and Shanghaiwas down 1.00 percent. |
Greece must hold fresh elections after talks on forming a newgovernment broke up without agreement Tuesday, prolonging atortuous crisis. The new polls, expected on June 17, follow an inconclusive electionon May 6 when a majority of Greeks voted against harsh austeritymeasures Athens took on in return for a huge EuropeanUnion-International Monetary Fund bailout. "We are going again towards elections... under very badconditions," Pasok party leader Evangelos Venizelos said after thelast-ditch talks failed. "The Greek people must now make the right decisions for the good ofthe country," stressed Venizelos, who supported the EU-IMF deal ina technocrat government formed last November.
In the meantime the country will be run by a caretakeradministration. Most polls indicate a new vote -- expected in the middle of June --will see anti-austerity parties improve on their surprisingperformance in this month's polls, when 70 percent of theelectorate voted against the swingeing cuts. Such an outcome would likely see the bailout deal ripped up andGreece default on its debt obligations before eventually exitingthe eurozone. The precarious financial situation was also highlighted whenPresident Carolos Papoulias said about 700 million euros ($894million) had been withdrawn from Greek banks on Monday and warnedthe situation could worsen in coming days. Despite the global market pessimism Merkel and Hollande, who flewto Berlin hours after his inauguration Tuesday, stressed theirdesire to keep the eurozone together.
Eyes were on the first meeting between the heads of the eurozone'sbiggest economies after Hollande defeated Nicolas Sarkozy in lastweek's election. Merkel was a Sarkozy ally and the architect of the European Union'sfiscal austerity drive. Hollande opposed the speed and depth of thecutbacks demanded by Berlin, and wants to renegotiate the region'sfiscal pact. Germany is committed to budgetary discipline, and Merkel hasrepeatedly insisted since Hollande's election that the pact, signedby 25 of the 27 EU countries and already ratified in some, is notopen to renegotiation. On currency markets the euro fell in afternoon Asian trade to$1.2686, its lowest since mid-January, compared with $1.2728 in NewYork late Tuesday.
The common currency fetched 102.00 yen against 102.12 yen, whilethe dollar was changing hands at 80.40 yen, from 80.37 yen. The Dow closed down 0.50 percent, the S&P 500 fell 0.57 percent andthe Nasdaq lost 0.30 percent. In Europe London's benchmark FTSE 100 eased 0.51 percent, theFrankfurt DAX 30 dropped 0.79 percent and the CAC 40 in Paris fell0.61 percent while Milan's FTSE Mib slumped 2.56 percent and theIBEX 35 in Madrid slid 1.6 percent. On oil markets New York's main contract, West Texas Intermediatecrude for delivery in June was down $1.33 to $92.65 per barrelwhile Brent North Sea crude for June shed $1.15 to $111.09 inafternoon trade. Gold was at $1,530.02 an ounce at 0635 GMT, compared with $1,558.71late Tuesday.
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