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Asian markets jittery over Greece woes, China rally fizzles
[HONG KONG] Concerns about Greece's plans to renegotiate its bailout rattled Asian markets Thursday and put pressure on the euro, while Shanghai and Hong Kong reversed early gains despite China cutting the amount of funds banks must hold in reserve.
Traders mostly took their cue from New York, which was hit by news that the European Central Bank would not allow Greek lenders to use government bonds to borrow cash, cutting off much-needed access to liquidity.
Tokyo tumbled 0.98 per cent, or 174.12 points, to finish at 17,504.62 despite Sony surging 12 per cent to a five-year high on an improved earnings outlook.
Sydney rose 0.58 per cent, or 33.64 points, to 5,810.98 - its 11th straight day of gains, while Seoul lost 0.51 per cent, or 9.95 points, to 1,952.84.
Shanghai, which surged 2.45 per cent during initial trade, ended 1.18 lower, shedding 37.59 points to 3,136.53.
Hong Kong added 0.35 per cent, or 85.73 points, to 24,765.49 having jumped 1.4 per cent just after the opening bell.
Under the terms of its bailout Greece's banks had been given a waiver to use government bonds - which have a junk rating - as collateral as long as Athens stuck to its obligations. but the anti-austerity Syriza party last month won a general election on a promise to renegotiate its debt repayment terms.
The announcement came hours after new Greek Finance Minister Yanis Varoufakis held talks with ECB chief Mario Draghi, in his latest stop during a Europe-wide charm offensive looking to drum up support for a new deal.
It also comes as Mr Varoufakis prepares to meet his German counterpart Wolfgang Schaeuble Thursday. The meeting will be closely monitored as Germany, the eurozone's main paymaster, is the strongest opponent of any easing in the bailout terms.
Athens said the move will have "no adverse impact" on its financial sector, saying it would be "fully protected", with other liquidity channels still available.
However, Greece's borrowing rate soared above the symbolic level of 10 percent in early European trade Thursday, from 9.678 per cent where it sat on Wednesday.
On Wall Street the Dow, which had surged during the day, ended flat Wednesday while the S&P 500 fell 0.42 per cent and the Nasdaq lost 0.23 per cent.
The euro ended Wednesday at US$1.1334 and 132.81 yen in New York, from US$1.1470 and 135.00 yen earlier in Asia.
On Thursday in Tokyo the single currency bought US$1.1337 and 132.78 yen.
The dollar was 117.12 yen on Thursday against 117.18 yen.
Shanghai sank despite China's central bank on Wednesday cutting the percentage of cash lenders must keep in reserve to kickstart the mainland economy. It was the first across-the-board cut since May 2012.
Official data last week showed the economy in 2014 grew at its slowest pace in 24 years, while two separate gauges indicated manufacturing activity slipped in January.
It was the latest move by authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.
"The move is aimed at helping the real economy and should boost lending to the private sector," Zhou Hao, a Shanghai-based economist at ANZ told Bloomberg News.
"It's likely that there will be another reserve-requirement ratio cut early in the second quarter." On oil markets US benchmark West Texas Intermediate for March delivery was down 55 cents at US$47.90 a barrel and Brent crude for March eased 71 cents at US$53.45.
Gold fetched US$1,267.10 an ounce, against $1,267.80 on Wednesday.
In other markets, Taipei was flat, edging down 1.87 points to 9,512.05.
Taiwan Semiconductor Manufacturing Co fell 0.34 per cent to Tw$145.5 while Hon Hai Precision Industry closed 0.23 per cent lower at Tw$87.3.
Wellington added 0.21 per cent, or 12.28 points, to 5,797.59. Air New Zealand was up 1.97 per cent at NZ$2.59 and Spark lifted 0.87 percent to NZ$3.49.
Manila eased 0.54 per cent, or 41.82 points, to 7,674.24. SM Investments fell 0.94 per cent to 896.50 pesos, Philippine Long Distance Telephone shed 0.13 per cent to 3,082 pesos while Ayala Land was down 1.53 per cent at 35.45 pesos.