Eurozone crisis overshadows Asian markets

HONG KONG, Dec 1, 2010 (AFP) - Asian stocks were lacklustre Wednesday as the eurozone crisis cast a worldwide shadow, Chinese manufacturing data raised rate hike expectations and Australian growth data disappointed.

HONG KONG, Dec 1, 2010 (AFP) - Asian stocks were lacklustre Wednesday as the eurozone crisis cast a worldwide shadow, Chinese manufacturing data raised rate hike expectations and Australian growth data disappointed.

Tokyo's Nikkei index ended the session up 0.51 percent, or 51.01 points, at 9,988.05, while Sydney's S&P/ASX 200 index ended flat, gaining just 2.2 points to reach 4,586.6.

Hong Kong's Hang Seng was down 0.38 percent by lunch and Shanghai's Composite Index was off 0.10 percent in the afternoon.

The markets took their cue from Wall Street, where the view of Europe's debt crisis appeared increasingly pessimistic and traders also faced mixed indicators on the state of the US recovery.

"Confidence in the European banking system has fallen rapidly and it appears drastic further action will be required by the European Union and the European Central Bank to avert a crisis," RBS Foreign Exchange Strategist Greg Gibbs told Dow Jones Newswires in Sydney.

"At this stage it's easier to see contagion spreading and risk appetite declining further globally before this gets better."

In Tokyo, Naoteru Teraoka, general manager at Chuo Mitsui Asset Management, said: "The factors that are weighing on Japanese stocks have not changed -- European debt problems and concerns about China's tightening moves."

In New York earlier the blue-chip Dow Jones Industrial Average fell 0.42 percent, the broader S&P 500 index dropped 0.61 percent and the tech-rich Nasdaq retreated 1.07 percent.

Following signs of a strong US shopping season, traders are now awaiting US jobs data on Friday for indications of the resilience of the recovery there.

The euro dipped below 1.30 dollars for the first time in more than two months on Tuesday as investors fretted that the debt contagion could spread beyond Ireland to Portugal, Spain or even Italy.

The euro changed hands at 1.2982 dollars in Tokyo midday Wednesday, compared with 1.2985 dollars late Tuesday in New York, where the common European unit had briefly fallen to 1.2969 dollars, its lowest since September 15.

The euro bought 108.63 yen, unchanged from New York. The greenback fetched 83.60 yen, also flat from New York.

Meanwhile expectations of an imminent Chinese rate hike were heightened by official data showing that manufacturing activity on the mainland accelerated in November despite rising costs of raw materials.

The manufacturing purchasing manager's index rose to 55.2 in November from 54.7 in October, according to the China Federation of Logistics and Purchasing.

In a separate survey, the HSBC China Manufacturing PMI rose to 55.3 last month from 54.8 in October as domestic and overseas orders for Chinese-made goods gathered pace.

A reading above 50 indicates expansion while a reading below 50 shows contraction.

"Despite the absence of negative news in recent days, worries about China's further monetary policy tightening are still present in the market and are hurting investor confidence," said analyst Wei Daoke of Shenyin Wanguo Securities.

Australian sentiment was also dented by worse-than-expected third quarter growth data, which suggested a slow-down in the resource-driven economy.

Treasurer Wayne Swan blamed the result on "one-off factors" including the surging Australian dollar and bad weather that forced three resource ports to close during the period.

Growth for the quarter to September was 0.2 percent, while the annual growth figure was 2.7 percent, from 3.3 percent the previous quarter.

Macquarie analyst Brian Redican said the result showed Australia's dependence on the mining sector.

"If there's any slippage in mining investment or mining construction then you do get a very weak outcome," Redican said. "Suddenly, there's nothing else to support growth."

Crude oil prices rose in Asian trade as freezing temperatures and heavy snowfall in Europe boosted demand for heating fuel, analysts said.

New York's main contract, light sweet crude for January delivery, gained 42 cents to 84.53 dollars a barrel. Brent North Sea crude for January advanced 36 cents to 86.28 dollars.

Gold opened at 1,386.00-1,387.00 dollars an ounce in Hong Kong, up from Tuesday's close of 1,369.00-1,370.00 dollars.

In other markets:

-- Seoul's Kopsi index rose 1.30 percent, or 24.69 points, at 1,929.32.

-- Manila rose 1.24 percent, or 49.18 points, to 4,002.88, following a six-percent drop over the past six sessions.

Aboitiz Power rose 1.5 percent to 33.30 pesos and Metropolitan Bank and Trust Co. added 1.2 percent to 70.20 pesos.

-- Wellington rose just 0.59 points to 3,265.10.

-- Taipei added 1.76 percent, or 147.63 points, to 8,520.11.

Hua Nan Financial Holdings rose by the 7.0 percent daily limit to 21.00 Taiwan dollars, while Taiwan Semiconductor Manufacturing Co gained 1.89 percent to 64.6.

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