Asian stocks fall amid Europe fears

Asian stock markets fell sharply today amid fresh anxiety over Europe’s debt problems and a potential default by Greece which would wreak havoc on the global economy.

Nervous investors unloaded equities amid concerns that Greece’s problems would spread across Europe, and headed for safer havens like bonds and the Japanese yen. The euro hit a 10-year low against the yen today.

“Greece basically has its back against the wall,” said Tom Kaan, head of equity sales at Louis Capital Markets in Hong Kong. “Having said that, the concern I have is no longer Greece. Greece has to default.”

The bigger concern, he said, was whether other European countries like Italy would follow.

“We’ll see still more sludge on the downside before things get better,” Mr Kaan said.

Japan’s Nikkei 225 stock average lost 2.3% to 8,535.67 – its lowest closing level since April 2009.

Hong Kong’s Hang Seng index shed almost 4% to 19,077.07 as worries about Europe’s massive debt problem and a possible recession in the United States weighed on investors.

Hong Kong-listed shares of the Industrial and Commercial Bank of China, the world’s biggest bank by market value, tumbled 4.9%. China Overseas Land & Investment, a blue chip property developer, plummeted 8.5%.

In Australia, the S&P/ASX 200 plunged 3.7% to 4,038.50. Losses were broad-based, with energy, materials and financial shares slumping. BHP Billiton, the world’s largest mining company, fell 3.9%. Rival Rio Tinto slid 4.3%.

“After escalating concerns that a Greek default was inevitable caused a precipitous plunge across European and US markets on Friday, it is of little surprise to see our market getting hammered today,” said Ben Potter, market strategist with IG Markets in Melbourne. “No-one really has any idea where this whole situation may end up.”

Benchmarks in New Zealand and Singapore also retreated. Financial markets in South Korea, mainland China and Taiwan were closed today for national holidays.

Wall Street suffered heavy losses before the weekend following the surprise resignation on Friday of a key European Central Bank official. The decision by Jergen Stark revealed deepening rifts over how to solve Europe’s economic problems and heightened concerns that the continent’s heavily indebted economies could collapse.

Debt-crippled Greece urgently needs to keep a programme of cutbacks on track to secure the continued flow of international rescue loans protecting it from a catastrophic bankruptcy.

The Dow Jones Industrials closed down 2.7% at 10,992.13. The yield on the 10-year Treasury note hit its lowest level in five decades.

President Barack Obama’s jobs plan announced last week yielded little reaction in global markets.

Neither did recent talks among the Group of Seven finance ministers and central bank governors, who ignored calls for a stronger unified response to Europe’s debt crisis. They instead insisted that each country should tread its own path back to growth amid concerns of a global slowdown.

The weekend resignation of Japan’s new trade minister after just eight days in office also unnerved the Tokyo market.

The exceptionally brief tenure of Yoshio Hachiro undermined confidence in Prime Minister Yoshiko Noda, who is tasked with reviving the economy and speeding up Japan’s recovery from the March 11 earthquake, tsunami and nuclear crisis.

In currencies, the dollar was trading lower at 77 yen. The euro fell to 1.3541 dollars and 104.32 yen.

Oil prices fell to near 85 dollars a barrel today in Asia as concern about Europe’s debt crisis also battered commodities.

Benchmark oil for October delivery was down 1.87 dollars to 85.37 dollars in electronic trading on the New York Mercantile Exchange. Crude fell 1.81 dollars to finish at 87.24 dollars on Friday.

In London, Brent crude for October delivery was down 1.66 dollars at 111.14 dollars on the ICE Futures exchange.