Asian markets tumble on unrest over Greek crisis

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The Independent Online

Asian stocks tumbled today, hammered by violent unrest in Greece amid the country's deteriorating debt crisis and a disappointing US manufacturing report.

Oil prices tumbled below $96 a barrel amid fears of sputtering US economic growth, which would dampen demand for crude. The dollar rose against the euro and was unchanged against the yen.

Asian markets followed their European and US counterparts lower after rioters clashed with police in Athens over proposed austerity measures and coalition talks between Greece's government and opposition parties collapsed, renewing fears of a government debt default.

In the US, a report on manufacturing in the New York area also came in far below forecasts. That reignited fears that factory production, one of the few bright spots in the U.S. economy, may be weaker than many economists had believed.

Japan's Nikkei 225 stock fell 1.5 percent to 9,434.54 while South Korea's Kospi fell 1.8 percent to 2,048.31. Hong Kong's Hang Seng dropped 1.5 percent to 22,020.08, while the Shanghai Composite Index lost 1 percent to 2,679.13. Benchmarks in Taiwan, Singapore and New Zealand also dropped.

"The Greek problem is a mess. Everyone is worrying whether the Greek government will default," said Jackson Wong, a vice president at Tanrich Securities in Hong Kong. "Everything seems just very negative at this point."

Wong said investors are also worried about China's stubbornly high inflation, which hit 5.5 percent in May, according to a report earlier this week, driven by food prices. The inflation also raises fears of another interest rate hike.

Adding to woes are reports of accounting problems at Chinese companies listed in North America, which are making investors warier of Chinese companies in general, Wong said.

The Greek debt crisis sent US stocks tumbling Wednesday while sending the dollar up 2 percent against the euro.

If Greece defaults on its debt, it could cause the dollar to strengthen even further against the euro. That would make products made by US companies more expensive abroad and drag down their profits.

On Wall Street, stocks tumbled after the June Empire State Manufacturing Survey came in well below forecasts. The survey from the New York Federal Reserve found that conditions for New York manufacturers are weakening and orders are falling. A measure of optimism among factory owners in the state fell to its lowest level since early 2009.

The Dow Jones industrial average fell 1.5 percent to close at 11,897.27. The drop erased all of its 123-point gain from Tuesday and put the average on track for a seventh straight week of losses.

The S&P 500 index fell 1.7 percent to 1,265.42. The Nasdaq fell 1.8 percent to 2,631.46.

Benchmark crude for July delivery was up 68 cents to $95.49 in electronic trading on the New York Mercantile Exchange on Wednesday. The contract fell $4.56 to settle at $94.81 on Wednesday.

In currencies, the euro slid to $1.4131 from $1.4169 in late trading Wednesday in New York. The dollar was little changed at 80.96 Japanese yen.