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Asia: Stocks mostly down, euro sinks as Greece delays payment

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[HONG KONG] Asian markets mostly sank on Friday, following Wall Street shares lower as the IMF cut its US growth outlook, while traders nervously watch events in Europe after Greece tied up a deal to delay its latest debt repayments.

While the delay gives Athens until the end of the month to reach an agreement with its creditors as it looks to reform its bailout terms, the euro retreated against the dollar and yen on concerns that stumbling blocks remain.

Tokyo fell 0.44 per cent by lunch, Hong Kong lost 0.20 per cent and Seoul gave back 0.38 per cent, but Sydney was flat and Shanghai rose 1.54 per cent.

Wall Street retreated after the International Monetary Fund slashed its forecasts for US growth this year to 2.5 per cent from a previous estimate of 3.1 per cent, citing a ports strike, bad winter weather, a strong dollar and the oil downturn.

Fund head Christine Lagarde also called on the Federal Reserve to refrain from hiking interest rates until 2016, saying conditions were not supportive of a move this year.

Her comments come as markets await the release Friday of US jobs growth for May, which is used by the Fed to guide rate policy.

The Opec oil cartel will also hold a meeting later in the day to determine production levels, with expectations that it will continue pumping at the current high levels, which would put downward pressure on crude prices.

The Dow fell 0.94 per cent, the S&P 500 dropped 0.86 per cent and the Nasdaq shed 0.79 per cent.

On currency markets the dollar was at 124.48 yen against 124.37 yen late Thursday in New York.

The euro slipped to US$1.1206 and 139.50 yen from US$1.1239 and 139.79 yen in US trade.

The single currency is well off the US$1.1283 and 140.25 yen seen earlier Thursday in Tokyo as Greece and its creditors struggle to reach a solution to overhaul its bailout.

Late Thursday the country bought some time for further talks by agreeing with the IMF to bundle four looming loan payments into one totalling 1.6 billion euros.

The move gives Athens until the end of the month to hammer out a deal that will unlock billions of euros needed to service its debts. There is a fear that a default could eventually force the country to leave the eurozone.

However, a Greek government source said there were key differences between the two sides, describing the creditors' position as "extreme" and "unacceptable".

Greece is seeking less harsh fiscal and reform requirements while the creditors are unhappy with efforts by Athens to roll back some earlier reform promises.

"The proverbial can has been kicked down the road toward the end of the month," said Raiko Shareef, markets strategist at the Bank of New Zealand, according to Bloomberg News.

Oil prices were mixed. US benchmark West Texas Intermediate for July delivery fell five cents to US$57.95 while Brent crude for July gained four cents to US$62.07.

Gold fetched US$1,177.96 compared with US$1,183.30 late Thursday.

AFP