Greek woes hit Asia ahead of weekend

Regional benchmarks end mostly lower as worries intensify after Spain's credit rating gets slashed

Asian stocks mostly fell, extending their recent rout, after credit rating downgrades of Greece and Portugal spurred concern's regarding Europe's debt. The worries were intensified yesterday after Standard & Poor's cut Spain's credit rating to AA from AA+. Asian markets contrasted with the overnight session in the U.S. where stocks ticked higher after the Federal Open Market Committee issued a generally upbeat statement at the conclusion of its monthly meeting. The FOMC statement reiterated the Federal Reserve's commitment to extremely low interest rates, as any move toward tighter monetary policy in the U.S. may crimp the undergoing economic recovery.

Meanwhile, a Euro zone/IMF aid package for Greece will be worth 100 to 120 billion euros over three years, according to IMF Managing Director Dominique Strauss-Kahn, a member of German parliament for the opposition Greens said, as per the media reports. This is higher than the earlier projected 45-60 billion euros. Juergen Trittin, a parliamentary leader for the Greens, brief the media yesterday that the German lawmakers were told Greece should be taken off the market de facto for three years. Also, the International Monetary Fund and the European Central Bank rejected a demand from some German lawmakers that banks be included in a rescue package for Greece.

The Australian market ended in negative territory, dragged down by banks and financials after ANZ Bank reported lower than expected profit for the first half. Positive closing on Wall Street in the previous session following positive comments from Federal Reserve failed to enthuse the markets as resource stocks also joined the list of declines on weak commodity prices. The benchmark S&P/ASX200 Index slipped 37.20 points, or 0.77% to close at 4,786, while the All-Ordinaries Index ended at 4,816, representing a loss of 38.10 points, or 0.78%.

On economic front, a report released by the Australian Property Monitors, or APM, revealed that median house prices in the country grew 3.1% quarter-over-quarter to A$542,000 in the March quarter, lower than the 4.8% increase reported for the preceding fourth quarter of 2009. APM said strong population growth, rising incomes, and falling unemployment were offsetting the impact of the Reserve Bank of Australia's interest rate hikes and were continuing to push up house prices. The report further noted that, on a yearly basis, house prices surged 16.2% in the March quarter - the fastest pace in six years. This follows a 12.1% increase in the December quarter.

Selling intensified in Chinese stocks as financials, property and manufacturing stocks continued to lead rout. China's Shanghai Composite dropped 1.1 % at the close, reversing earlier gains. Hong Kong's Hang Seng Index also fell 0.8 %.

In other markets, South Korea's Kospi index sank 0.3 %, New Zealand's NZX 50 Index rose 0.1 %, while Philippines's PSEi escalated 0.37% or 12.22 points to 3,297.00. Japanese markets were closed for a national holiday.

In Mumbai, equity markets bounced back after falling in early moves as upbeat economic assessment and falling food prices augured supportive. At the close, the benchmark 30-share index, BSE Sensex added 116.13 or 0.67% at 17,496.21 with 20 components registering rise. Meanwhile, the broad based NSE Nifty climbed by 39.10 or 0.75% at 5,254.55 with 30 components posting rise. India's annual food price inflation eased slightly on lower prices of select grains and vegetables while fuel price inflation went up, maintaining an upside pressure on the wholesale price index. The food price index rose 16.61 % in the 12 months to April 17, lower than an annual rise of 17.65 % in the previous week, government data showed on Thursday.

The EUR/USD exchange rate hit a low of 1.3184 in Asian trade, reflecting ongoing concerns about debt levels in several European countries. There are continuing worries over whether Germany will approve aid to Greece ahead of a critical late-May deadline. Although the EUR/USD recovered slightly to trade above 1.3200, holding up above it would be critical.

In commodities, West Texas Intermediate crude for June delivery rose above $84 per barrel as investors covered some of their recent shorts amid worries that the gasoline demand would supportive oil prices in days to come. US Crude stockpiles grew despite a 3.1-%age-point increase in refinery utilization to 89% of capacity. Inventories at the key delivery point for Nymex crude in Cushing, Okla., rose by 500,000 barrels to 34.6 million barrels. The commodity was last see quoting at $84.11, up 89 cents from the previous close after hitting a high of $84.45 per barrel.