Asia stocks down as Greek vote plan rocks markets

Nov 2 2011 - 10:15am

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(LEE JIN-MAN/The Associated Press) A currency trader reacts at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Wednesday, Nov. 2, 2011. A wave of selling swept across Wall Street and stock markets around the world Tuesday after Greece’s prime minister said he would call a national vote on an unpopular European plan to rescue that nation’s economy.
Red figures reflected on a glass panel dot an electronic board to indicate downward trend in the trading as a trader takes a break at the Philippine Stock Exchange (PSE) at the financial district of Makati city, east of Manila Wednesday Nov. 2, 2011. Asian stocks slumped for a third consecutive day, extending the wave of selling in world markets that was sparked Monday when Greek Prime Minister George Papandreou said he would call a national vote on an unpopular European plan that entails painful tax increases and drastic welfare cuts. (AP Photo/Bullit Marquez)
A woman walks past the electronic stock board showing Japan's benchmark Nikkei 225 index, top left, at a securities firm in Tokyo, Japan, Wednesday, Nov. 2, 2011. Asian stocks slumped for a third day Wednesday, as fears intensified that Greece might reject an austerity plan and default on its massive debts. (AP Photo/Itsuo Inouye)
A woman walks by a screen displaying the Hong Kong stock index's movement at a stockbrokerage firm in Hong Kong Wednesday, Nov. 2, 2011. Asian stocks slumped for a third day Wednesday, as fears intensified that Greece might reject an austerity plan and default on its massive debts. Hong Kong's Hang Seng dropped 177.24 to 19,192.72 in the mid day close. (AP Photo/Vincent Yu)
A currency trader watches monitors at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Wednesday, Nov. 2, 2011. A wave of selling swept across Wall Street and stock markets around the world Tuesday after Greece's prime minister said he would call a national vote on an unpopular European plan to rescue that nation's economy. (AP Photo/Lee Jin-man)
(LEE JIN-MAN/The Associated Press) A currency trader reacts at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Wednesday, Nov. 2, 2011. A wave of selling swept across Wall Street and stock markets around the world Tuesday after Greece’s prime minister said he would call a national vote on an unpopular European plan to rescue that nation’s economy.
Red figures reflected on a glass panel dot an electronic board to indicate downward trend in the trading as a trader takes a break at the Philippine Stock Exchange (PSE) at the financial district of Makati city, east of Manila Wednesday Nov. 2, 2011. Asian stocks slumped for a third consecutive day, extending the wave of selling in world markets that was sparked Monday when Greek Prime Minister George Papandreou said he would call a national vote on an unpopular European plan that entails painful tax increases and drastic welfare cuts. (AP Photo/Bullit Marquez)
A woman walks past the electronic stock board showing Japan's benchmark Nikkei 225 index, top left, at a securities firm in Tokyo, Japan, Wednesday, Nov. 2, 2011. Asian stocks slumped for a third day Wednesday, as fears intensified that Greece might reject an austerity plan and default on its massive debts. (AP Photo/Itsuo Inouye)
A woman walks by a screen displaying the Hong Kong stock index's movement at a stockbrokerage firm in Hong Kong Wednesday, Nov. 2, 2011. Asian stocks slumped for a third day Wednesday, as fears intensified that Greece might reject an austerity plan and default on its massive debts. Hong Kong's Hang Seng dropped 177.24 to 19,192.72 in the mid day close. (AP Photo/Vincent Yu)
A currency trader watches monitors at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Wednesday, Nov. 2, 2011. A wave of selling swept across Wall Street and stock markets around the world Tuesday after Greece's prime minister said he would call a national vote on an unpopular European plan to rescue that nation's economy. (AP Photo/Lee Jin-man)

BANGKOK -- Global market turmoil continued Wednesday as fears intensified that Greece might reject an austerity plan and default on its massive debts.

Asian stocks slumped for a third consecutive day, extending the wave of selling in world markets that was sparked Monday when Greece's prime minister said he would call a national vote on an unpopular European plan that entails painful tax increases and drastic welfare cuts.

Oil fell below $91 a barrel, while the dollar was steady against the euro but lower against the yen.

Japan's Nikkei 225 index tumbled 1.8 percent to 8,673.78. Hong Kong's Hang Seng dropped 0.9 percent to 19,192.72 and South Korea's Kospi index sank 0.9 percent to 1,892.70. Australia's S&P/ASX 200 index lost 0.7 percent to 4,201.40.

Benchmarks in mainland China, Taiwan, Indonesia, Thailand and Malaysia also fell. Singapore's rose.

A top European official warned that Athens could be left to go bankrupt if it went through with the vote and experts said the broader deal -- which hopes to protect larger countries such as Italy from markets panic and was agreed to only last week -- could collapse.

Ultimately, Greece could leave the 17-nation euro currency union, causing financial havoc and pushing the global economy back into recession.

"A no vote could quickly start a chain reaction leading to Greece being forced to leave the Monetary Union. A resulting run on Greek banks could have serious spillover effects on Portugal and Ireland," Citibank analysts said in a report.

That prospect could be enough to keep the referendum from happening -- Papandreou's government could collapse before the proposal goes through, having lost huge amounts of support from its own party.

The possibility of financial contagion spreading across the continent rattled banking stocks. Japan's Mitsubish UFJ Financial Group fell 2.1 percent. Industrial & Commercial Bank of China, the world's largest bank by assets, slid 1.9 percent. Australia & New Zealand Banking Group fell 1.8 percent.

The Dow fell 2.5 percent to close at 11,657.96 on Tuesday. It was the biggest drop since Sept. 22. The S&P 500 lost 2.8 percent to 1,218.28. The Nasdaq composite dropped 2.9 percent to 2,606.96.

Japan's powerhouse export sector fell sharply, a day after data showed that U.S. manufacturing grew more slowly in October, hampered by weak demand for exports.

Mazda Motor Corp. tumbled 4.8 percent, Panasonic Corp. lost 3.3 percent and Sharp Corp. fell 3.3 percent.

Japanese utility Tokyo Electric Power Co. fell 1.3 percent after saying there may be signs of fresh nuclear fission in the No. 2 reactor at its disaster-damaged Fukushima Daiichi power plant.

Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 1 percent to 2,445.40 and the Shenzhen Composite Index lost 1.3 percent to 1,028.30.

"The loss was due to both to what is happening with Greece and also China's worse than expected manufacturing data, which shows slower growth," said Cai Dagui, an analyst at Ping'an Securities, based in Shenzhen.

Shanghai-listed Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. lost 4.6 percent while Huaxin Cement fell 3.1 percent.

Benchmark crude for December delivery was down 62 cents at $91.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1 to settle at $92.19 in New York on Tuesday.

In currency trading, the euro was steady at $1.3715. At one point Tuesday, the euro fell to $1.3607, its lowest point since Oct. 12. The euro is down nearly 4 percent after hitting a seven-week high Thursday, when the European financial rescue plan was announced.

The dollar slipped to 78.10 yen from 78.33 yen.

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