Asia unfazed despite Greek impasse
THE euro weakened yesterday, with European stock markets falling at the start of trading after the showdown debt talks between Greece and its creditors collapsed, raising the possibility that the country will be dumped out of the euro zone.
London's benchmark FTSE 100 index slipped 0.28 per cent to 6,838.06 points, Frankfurt's DAX 30 slid 0.69 per cent to 10,847.73 points and the CAC 40 index in Paris lost 0.65 per cent to 4,720.93, compared with Monday's close.
However, many Asian equity markets were unfazed by the trouble in Europe as trade begins to wind down in several bourses before the Chinese New Year holiday at the end of the week.
Singapore fell 0.33 per cent, or 11.25 points, to close at 3,415.91. Tokyo fell 0.10 per cent, or 17.68 points, to 17,987.09 and Sydney lost 0.52 per cent, or 30.5 points, to 5,858.2.
But Seoul gained 0.16 per cent, or 3.22 points, to 1,961.45, while Shanghai rose 0.76 per cent, or 24.55 points, to 3,246.91 and Hong Kong advanced 0.24 per cent, or 58.35 points, to 24,784.88.
"Markets recognised the discussions were going to be difficult, so I don't think this changes people's expectations dramatically," said Angus Gluskie, managing director at White Funds Management in Sydney.
"But it is a key point of uncertainty for investment markets, so it's likely to mean that investors will continue to be cautious."
The closely watched meeting on Monday broke down without agreement on Greece's debt, after Athens refused euro-zone finance ministers' demands that it apply for an extension to its bailout.
Eurogroup head Jeroen Dijsselbloem said the country had the rest of the week to make the request, with the 240 billion euro (S$372 billion) lifeline expiring at the end of the month. But an Athens source dismissed the demand to stick to its current bailout as "absurd".
Greece's new left-led government swept to power last month on a platform of overhauling the terms of the austerity-laden financial aid package, which it says has crippled the economy.
Finance Minister Yanis Varoufakis is looking for a six-month bridging loan to give Greece time and financial help to negotiate a new deal. However, the 18 other euro-zone nations, led by Germany, say any changes must be within the current programme.
The breakdown hit the euro, which sank to US$1.1351 (S$1.54) and 134.47 yen, from US$1.1390 and 134.53 yen in London on Monday.
It was also sharply down from the US$1.1421 and 135.43 yen levels earlier that day in Tokyo.
The dollar bought 118.52 yen against 118.47 yen. US markets were closed on Monday for a public holiday.
Oil prices moved higher after key crude producer Kuwait signalled that the recent rise in prices would hold, while resurgent violence in Libya also provided support.
US benchmark West Texas Intermediate for delivery next month rose 41 cents to US$53.19, while Brent crude for April gained 51 cents to US$61.91. Gold fetched US$1,220.88 an ounce, against US$1,233.33 on Monday.