Asian stocks fall sharply amid renewed Europe debt worries as euro continues slide

By Alex Kennedy, AP
Wednesday, May 26, 2010

Asian stocks slide on renewed Europe fears

TOKYO — Asian stock markets tumbled Tuesday, extending a sell-off that sent Wall Street lower overnight as the sliding euro hit exporters amid a new wave of pessimism about the global economy’s health.

Renewed worries about Europe’s debt problems and a shaky euro rattled already anxious investors, who grew more uncertain about the outlook for the U.S. and global economies.

Japan’s Nikkei 225 stock average shed 2.4 percent to 9,526.97 as the yen’s strength against the common European currency hammered exporters.

Hong Kong’s Hang Seng index fell 2 percent to 19,278.05, and South Korea’s Kospi lost 3 percent to 1,556.28. Benchmarks in Australia, Taiwan, Singapore and mainland China also retreated.

The weekend rescue of a small Spanish bank exacerbated investor pessimism about Europe’s financial health. The Bank of Spain stepped in to rescue Cajasur after it failed to complete a merger. It was only the second time Spain’s central bank had saved a regional lender.

The euro’s weakness also unnerved markets. Traders have been dumping the 16-nation currency on fears that massive debts will cause defaults by weaker countries in the European Union.

In Tokyo, exporters fell sharply as the euro depreciated against the yen. Leading declines were precision equipment makers like Nikon Corp. and Olympus Corp., which depend on Europe for a big part of their business.

Nikon plunged 5 percent, and Olympus fell 3.6 percent.

In New York on Monday, the Dow fell 126.82, or 1.2 percent, to 10,066.57. The S&P 500 index fell 14.04, or 1.3 percent, to 1,073.65, and the Nasdaq composite index fell 15.49, or 0.7 percent, to 2,213.55.

Crude oil for July delivery fell 59 cents to $69.62 a barrel on the New York Mercantile Exchange.

In currencies, the dollar slipped to 90.10 yen from 90.22 yen late Monday. The euro sank to $1.2312 from $1.2342.

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