Asian stock markets were mostly lower Thursday amid new signs of pressure on Europe’s banking system and a downturn on Wall Street.
Benchmark oil lingered above $99 per barrel while the dollar rose against the euro but fell against the yen.
Japan’s Nikkei 225 index fell 0.7 percent to 8,367.73. Hong Kong’s Hang Seng Index was 0.9 percent lower at 18,349.90. Australia’s S&P ASX 200 fell 0.6 percent to 4,064.20. Benchmarks in India and Indonesia were also lower.
But South Korea’s Kospi reversed earlier losses and gained 0.1 percent to 1,827.17. Benchmarks in Singapore and Taiwan also rose after a lower opening. Shares in mainland China and Malaysia were also higher. Overall, stock markets were quieter than normal as many traders go on vacation the week between Christmas and New Year’s.
Investor sentiment waned hours after the European Central Bank said banks had parked $590.72 billion with it overnight, surpassing the record set only Monday. That means European banks were less willing to take the risk of making short-term loans to each other, opting instead to earn low interest rates from the ECB — with money lent by the central bank itself.
Francis Lun, managing director of Lyncean Holdings in Hong Kong, said the action on the part of the banks “defeated the purpose” of the ECB lending operation, which was to spur business activity.
“Investors are disappointed at the development,” Lun said. “Europe still has not found an answer on how to solve its sovereign debt crisis. There’s no solution, and they are trying cosmetic measures, which really do not address the problem.”
The development also shook confidence in the euro, which on Wednesday dropped to $1.2910 — its lowest level against the dollar in nearly a year — before recovering slightly.
“As we have seen time and time again throughout 2011, when EUR/USD falls, so does equities, and so does gold, with traders buying into fixed income assets,” Chris Weston of IG Markets in Melbourne wrote in a research note.
Even successful bond auctions in Italy failed to lift the euro against the dollar. Demand for Italian bonds was strong Wednesday, and the country was able to pay lower interest rates.
Meanwhile, the yen’s rise to a 10-year high against the euro put stress on Japan’s exporters. Kyodo News agency said the euro briefly fell to 100.35 yen in Tokyo, its lowest level against the Japanese currency since June 2001.
Honda Motor Corp. fell 1.4 percent. Sharp Corp. shed 3.6 percent. Yamaha Motor Corp. and Suzuki Motor Corp. both lost 1 percent.
Commodity shares in Australia came under pressure amid worries about the state of the global economy. Gold miner Newcrest Mining Ltd. lost 3.1 percent. Woodside Petroleum fell 1.1 percent. OZ Minerals fell 3.3 percent after the company said copper concentrate may have spilled from a derailed train.
In currency trading Thursday, the euro fell to $1.2929 from $1.2941 late Wednesday in New York. The dollar fell to 77.72 yen from 77.91 yen.
On Wall Street, the Dow Jones industrial average fell 1.1 percent to 12,151.41. The S&P 500 fell 1.3 percent to 1,249.64. The Nasdaq composite declined 1.3 percent to 2,589.98.
Benchmark crude for February delivery rose 6 cents to $99.42 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.98 to settle at $99.36 in New York on Wednesday.