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"With signs of weakness in the U.S. economy, the persistence of the eurozone debt crisis and the threat of a hard landing in China looming, the prospect of a synchronized economic slowdown is real," analysts at DBS Bank Ltd. in Singapore said in a market commentary. Sentiment was also shaken after Moody's Investors Service lowered the credit ratings of 15 major banks, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking. Downgrades generally make it more costly for banks to raise money by selling debt because investors demand higher interest in return for taking on riskier debt. "Of course, they deserve it for years of mismanagement and speculative trading activities ... and also the exposure to sovereign bank debt," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "So, as a result, all these major international banks are being downgraded to a more realistic level." In Asian trading, Japan's Nikkei 225 index fell 0.2 percent to 8,802.54 and South Korea's Kospi slid 2.1 percent to 1,848.57. Hong Kong's Hang Seng Index lost 1 percent to 19,067.51 and Australia's S&P/ASX 200 was down 1 percent at 4,046.70. Benchmarks in Singapore, Taiwan, Thailand and Indonesia fell while the Philippines rose. Markets in mainland China were closed for a public holiday.
Benchmark oil for August delivery was up 48 cents to $78.68 per barrel in electronic trading on the New York Mercantile Exchange. The euro rose 0.1 percent to $1.2555. The dollar rose 0.1 percent to 80.31 yen.
[Associated
Press;
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