Asia stocks follow US and European markets down

Asian stock markets fell today as worries about Greece’s debt crisis and India’s sudden interest rate hike rattled investors.

Major indexes were down as much as 2% after selling hit US and European markets on Friday. Oil prices fell towards $80 a barrel, while the euro slid further against the dollar.

Anxiety over Greece’s ability to pay its massive debts has weighed on investors in recent months.

But with other countries that use the euro currency reluctant to come to Greece’s aid, a solution has been out of reach. Yesterday, Germany’s chancellor crushed talk a bailout might be discussed at this week’s European summit.

Further weighing on investors was an unexpected decision by India’s central bank to raise interest rates. The Reserve Bank of India hiked key lending rates late on Friday by a quarter percentage point in an attempt to cool high inflation amid a faster-than-expected economic rebound. The move unnerved investors concerned growth and asset prices could sink once governments start winding down their stimulus measures.

Hong Kong’s Hang Seng index fell 361.72 points, or 1.7%, to close at 21,009.10 today and South Korea’s main benchmark lost 14.06, or 0.8%, at 1,672.05.

Japanese markets were closed for a national holiday.

Elsewhere, Australia’s market was off 0.9% and India’s Sensex dropped 0.3%. Shanghai’s benchmark added 0.2% in back-and-forth trade.

Oil prices were down in Asia, with benchmark crude for April delivery falling 46 cents to 80.22 dollars a barrel.

In currencies, the dollar edged down to 90.43 yen from 90.53 yen.

Greece’s fiscal crisis has deepened worries lately about countries that ran up enormous debts before the financial crisis and borrowed even more to finance stimulus packages when the recession hit.

The International Monetary Fund sounded the latest warning yesterday, saying countries must watch surging levels of government debt that could otherwise drag down the growth needed to ensure continued economic recovery.

The economic crisis is leaving “deep scars in fiscal balances, particularly in the advanced economies,” John Lipsky, the IMF’s No 2 official, told the China Development Forum in Beijing. He said countries should now prepare for belt-tightening steps next year.

Friday on Wall Street, The Dow fell 37.19, or 0.3%, to 10,741.98.

The Standard & Poor’s 500 index fell 5.93, or 0.5%, to 1,159.90.