Asian markets hit by Greece jitters

DRAWING A LINE: By taking a tough line on Greece, the ECB is sending a signal that it is no longer willing to do governments' work for them, analysts said


    Feb 06, 2015

    Asian markets hit by Greece jitters


    CONCERNS about Greece's plans to renegotiate its bailout rattled Asian markets yesterday 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 (ECB) would not allow Greek lenders to use government bonds to borrow cash, cutting off much-needed access to liquidity.

    In Singapore, the benchmark Straits Times Index fell 10.99 points or 0.3 per cent to 3,406.58, erasing gains it had made on Wednesday.

    Most other regional markets were also weighed down by the ECB's decision on Wednesday night to toughen its stance on Greece.

    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.

    "There is increasing fear that Greece may leave the (European) Union if European leaders are not able to come to an agreement on Greece's debt restructuring," Phillip Futures analyst Howie Lee said.

    However, he added that the new left-wing Greek government would likely not be "held to ransom". "No one wins at the end of the day if Greece leaves."

    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.

    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 that the economy last year grew at its slowest pace in 24 years, while two separate gauges indicated manufacturing activity slipped last month.

    It was the latest move by the authorities to juice the economy after the bank in November unveiled a surprise cut in interest rates.

    In Singapore, the most active stock was Pacific Andes, which inched up 0.1 cent to 5.8 cents on 66.2 million shares traded.

    There were 989.4 million shares worth $1.05 billion in total traded, with the 139 gainers outnumbered by the 229 losers.