Risk aversion glides Asia lower

Continued worries on Greece, stronger dollar hurt sentiments

Risk aversion came back in action as the markets waited for more clarity on the Greece bailout talks. The country may turn for financial help from the International Monetary Fund and the Asian benchmarks slipped today on the continued worries that a sovereign default by Greece may rattle the other European economies as well. Commodities were under pressure and US dollar rallied; prompting investors to lock in some of gains after the US stocks hit two months highs yesterday. The economic data is doing little in the current scenario and even though most of the market participants think that Greece can muddle through this year, it is unlikely to manage to do so in the next year without the support of the EU. The conditionality of such a support is a different thing and right now, the most critical thing for the markets is clarity.

The DOW had ended in green yesterday but it failed to enthuse the Asian stocks. Japanese markets slipped as the exporters were dragged lower. A decline in business confidence also contributed to the weakness. The benchmark Nikkei 225 index declined 1% by the close.

Chinese stocks had a volatile outing. About four stocks rose for every three that dropped on the Shanghai Composite Index, which fell 4.39, or 0.1 percent, to 3,046.09 at the close. The Shanghai index has lost 7.1 percent this year as the government twice increased the proportion of deposits banks need to set aside as reserves and re-imposed a tax on home sales.

In other markets, New Zealand's NZX 50 rose 0.6% and Philippine stocks ended up 0.45.

However, the Australian stocks closed marginally higher on late buying. Defensive stocks such as telecommunications, utilities and consumer staples fared best although mining stocks capped their gains despite higher commodity prices. The benchmark S&P/ASX200 index was up 9.9 points, or 0.2 per cent, to 4863.1 points, while the broader All Ordinaries index added 10.8 points, or 0.22 per cent, to 4,877.7 points.

In Mumbai, the key benchmark indices surged to the day's highs at the fag end of the trade after global rating agency Standard & Poor's revised India's rating outlook to stable from negative. S&P affirmed the 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. Banking and metal stocks rose. The BSE 30-share Sensex was up provisionally up 44.46 points or 0.25%, up close to 115 points from the day's low. But the market breadth was negative.

On Wall Street, stocks saw moderate strength on Wednesday amid fairly encouraging economic reports. The major averages ended the day firmly in positive territory, reaching their best closing levels in over a year. The Dow advanced by 47.7 points or 0.5% to 10,733.7, the Nasdaq closed up 11.1 points or 0.5% at 2,389.1 and the S&P 500 ended up 6.8 points or 0.6% at 1,166.2.

The US dollar hovered under 1.3700 mark against the Euro though the currency gave some of the yesterday's gains away, backtracking from a high of 1.3647. Crude oil slipped under $82 for a while and rebounded. The commodity was last seen quoting at $82.39, down 54 cents from the previous close.