Asian stocks turned in a mixed performance on Tuesday, as worries about the possible exit of Greece from the euro-zone continue to haunt investors. Investors fear that the European debt crisis could spiral out of control and weigh on global growth if Greece were to exit the euro zone and default on its debt.
Moody's announcement that it had downgraded Italian banks also weighed on markets, but stocks pared losses after data showed Germany's economy grew at a faster pace than expected in the first quarter amid a surge in exports to emerging markets.
Commodities cut early losses and the euro strengthened against the dollar, boosted by better-than-expected German GDP figures. In Greece, the political parties which are split over implementing austerity measures, have until Thursday to either form a coalition government or call a fresh general election.
Investors also eagerly await the outcome of a meeting between incoming French President Francois Hollande and German Chancellor Angela Merkel later in the day to examine how they will overcome differences on tackling the sovereign debt crisis.
Japanese shares drifted lower, as weak leads from overseas markets sparked by Greece's political and economic turmoil and rising Spanish bond yields curbed appetite for risk. The Nikkei average ended down 0.8 percent at a fresh three-month low, while the broader Topix index declined 1.2 percent. Euro-linked exporters such as Canon and Nikon fell 1-2 percent, Olympus slumped 4 percent and Ricoh shed 2.3 percent.
Sony lost 2.3 percent and Panasonic ended down 3.1 percent after reports said the two electronics giants are in talks to jointly develop the technology to produce next-generation flat-panel televisions. Brokerage Nomura Holdings lost 2.2 percent, realtor Mitsui Fudosan fell 2.5 percent and trading house Mitsubishi Corp. declined 1.5 percent. Telecoms firm KDDI rose 1.2 percent on defensive buying, while Takeda Pharmaceutical ended up 0.8 percent.
China's Shanghai Composite index ended 0.3 percent lower at a near one-month low, while Hong Kong's Hang Seng index finished up 0.8 percent, halting an eight-day losing streak.
Australian shares lost ground as lingering political uncertainty in Greece dented investor sentiment. The benchmark S&P/ASX 200 lost a percent early in the session before recouping some losses and ending down 0.7 percent at 4,266. while the broader All Ordinaries index shed 0.8 percent.
Miners led the declines amid fears over the escalation of the Greek political crisis. BHP Billiton fell 1.7 percent and Rio Tinto lost 1.1 percent, while smaller rival Fortescue Metals slumped 4.5 percent. Energy stocks also retreated sharply after economic uncertainties in China and Europe dragged U.S. crude futures down to a five-month low on Monday. Woodside Petroleum and Oil Search lost around 2 percent each, while shares of Santos eased 1.1 percent.
Pacific Brands plummeted 5.7 percent after the clothing and linen maker said a takeover bid for the company was unlikely in the near term. Coca-Cola Amatil added 1.1 percent as the beverages supplier forecast 4-5 percent growth in underlying profit in the first half of the 2012 calendar year. Telstra, Australia's biggest phone company, rose 1.9 percent to a three-year high,as investors considered defensive bets in volatile markets.
South Korea's Kospi average recouped most of its early losses, but still ended the session down 0.8 percent below the closely-watched 1,900 level, extending declines for a fifth straight day. Crude oil refiners bore the brunt of the selling, with S-Oil, SK Innovation and GS Holdings retreating 2-3 percent, as U.S. crude futures dropped towards $94 a barrel in Asian trading Tuesday, pressured by escalating worries over the euro zone debt situation and a weakening Chinese economy.
Tech stocks also lost ground, with LG Display tumbling 3.9 percent, while LG Electronics lost 2.1 percent and SK Hynix shed 3.1 percent.
New Zealand shares fell, joining a global slide in equities as Greece struggled to form a coalition government. The benchmark NZX-50 index dropped 0.6 percent. Freightways tumbled 3.9 percent, Port of Tauranga, fell 1.3 percent and Ryman Healthcare shed 0.9 percent, as investors took some profits off the table following sharp gains this year. Infrastructure investor Infratil ended flat on saying it expects full-year earnings to rise almost 10 percent, led by returns on capital investment.
PGG Wrightson lost 3 percent after the Real Estate Institute warned of a slowdown in farm sales. Heartland New Zealand, the would-be bank, slumped 3.7 percent as local lenders slashed mortgage rates. Gold miner OceanaGold plunged 4.6 percent to its lowest level in more than two years, as gold prices fell to a four and a half month low on Monday, hit by concerns about Greece leaving the euro zone.
Elsewhere, India's benchmark Sensex was last trading up 0.6 percent, Singapore's Straits Times index was up half a percent and the Taiwan Weighted average rose 0.3 percent, while Indonesia's Jakarta Composite index slipped 0.2 percent and Malaysia's KLSE Composite declined 0.9 percent.
On Wall Street, stocks ended at more than three-month lows overnight amid concerns about a weakening Chinese economy and the economic outlook for Greece after talks to form a new government in the debt-laden country failed. The Dow lost a percent, while the tech-heavy Nasdaq and the S&P 500 dropped around 1.1 percent each.
by RTT Staff Writer
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