Asian stocks mostly down on Europe bank worries

[December 29, 2011]  BANGKOK (AP) -- Asian stock markets were mostly lower Thursday as traders shied away from riskier assets as the year drew to a close, but hopes for a successful bond issue in Italy boosted shares in Europe.

Benchmark oil lingered above $99 per barrel while the dollar rose against the euro but fell against the yen.

European shares edged up in early trading. Britain's FTSE 100 was marginally higher at 5,511.32. Germany's DAX rose 0.3 percent to 5,788.06. France's CAC-40 was 0.3 percent higher at 5,788.01. Wall Street was headed for a higher opening, with Dow Jones industrial futures gaining 0.2 percent at 12,099. Broader S&P 500 futures rose 0.1 percent at 1,245.80.

Earlier in Asia, however, investors booked losses amid light trading. Japan's Nikkei 225 index fell 0.3 percent to close at 8,398.89. Hong Kong's Hang Seng Index closed 0.7 percent lower at 18,397.92. Australia's S&P ASX 200 fell 0.4 percent to end 4,071.10. Benchmarks in India and Singapore were also lower.

Other Asian markets eked out small gains. South Korea's Kospi reversed earlier losses and closed marginally higher at 1,825.74. On mainland China, the benchmark Shanghai Composite Index gained 0.2 percent to end at 2,173.56, while the smaller Shenzhen Composite Index added 0.1 percent to finish at 850.94.

Investor sentiment waned in Asia hours after the European Central Bank said banks had parked $590.72 billion with it overnight Wednesday. That surpassed the record set only Monday and showed that European banks were using money lent by the ECB bank to park money there instead, rather than make loans to each other.

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.

Traders were closely watching for the results of an auction of longer-dated bonds by Italy later Thursday. The country held what was deemed a surprisingly successful auction of short-term bonds Wednesday, with sharply lower interest rates than at a similar auction a month before.

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 0.8 percent. Sharp Corp. shed 3.2 percent.

Commodity shares in Australia came under pressure amid worries about the state of the global economy. Gold miner Newcrest Mining Ltd. lost 3 percent. Mining giant Rio Tinto fell 0.4 percent. OZ Minerals fell 2.9 percent after the company said copper concentrate may have spilled from a derailed train.

In currency trading Thursday, the euro fell to $1.2920 from $1.2941 late Wednesday in New York. The dollar fell to 77.70 yen from 77.91 yen.

Benchmark crude for February delivery rose 28 cents to $99.65 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.98 to settle at $99.36 in New York on Wednesday.

[Associated Press; By PAMELA SAMPSON]

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