Asia: Markets mostly down, euro picks up

[HONG KONG] Most Asian markets edged down Tuesday, with Shanghai and Hong Kong hit by another weak batch of indicators, but the euro was supported by upbeat German trade data.

Wall Street provided a negative lead as last week's strong jobs report fanned expectations that the Federal Reserve will increase borrowing rates soon.

Tokyo slipped 0.70 per cent owing to a pickup in the yen, while Hong Kong lost 0.27 per cent and Shanghai eased 0.12 per cent, while Seoul was marginally lower. But Sydney gained 0.39 per cent.

In the morning China's National Bureau of Statistics said the consumer price index, a country's main gauge of inflation, came in at 1.2 per cent in May, down from April's 1.5 per cent.

The figure is the latest showing signs of weakness in the world's second biggest economy and reignite worries about the country slipping into a painful spiral of deflation, which could further drag on any recovery.

Tuesday's data also come a day after a report showing a heavier-than-expected fall in imports, a seventh-straight drop, as Beijing struggles to get growth back on track.

In foreign exchange markets the dollar was at 124.64 yen early Tuesday, higher than 124.47 yen in US trade late Monday but still well below 125.52 yen in Tokyo earlier Monday owing to profit-taking.

The greenback also dipped Monday after media reports that US President Barack Obama had told Group of Seven leaders in Germany that the currency's recent strength "posed a problem".

But the White House denied that quickly, and Mr Obama told reporters: "I did not say that. And I make a practice of not commenting on the daily fluctuations of the dollar or any other currency." The euro was at US$1.1295 and 140.71 yen Tuesday from US$1.1293 and 140.57 yen on Monday in New York.

The single currency recovered most of its recent losses on the back of data showing a widening of Germany's trade surplus in April as exports grew 1.9 percent and imports fell 1.3 per cent.

However, the euro remains fragile as traders watch stalled debt reform talks between Greece and its creditors, with the two unable to reach an agreement that will unlock much needed funds for Athens to avert a default and possible eurozone exit.

In New York the Dow lost 0.46 per cent, the S&P 500 shed 0.65 per cent and the Nasdaq fell 0.92 per cent.

Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo, told Bloomberg News: "We still have concerns over US monetary policy and Greece hanging over our heads.

"If the US moves towards raising rates, bonds will be sold, and if that turns into a big move, there'll also be consequences for stocks." Oil prices were higher. US benchmark West Texas Intermediate for July delivery rose 22 cents to US$58.36 while Brent crude for July gained 20 cents to US$62.89.

Gold fetched US$1,176.01 compared with US$1,174.47 late Monday.

AFP