Asian market buzz today

HONG KONG: Asian markets plunged Thursday on growing fears of a regional slowdown after South Korea unexpectedly cut interest rates, and Japan's central bank's  major policy changes failed to boost growth.

Tokyo fell 1.48 percent, or 130.99 points, to end at 8,720.01, while Seoul closed down 2.24 percent, or 41 points, at 1,785.39.

Hong Kong stocks closed 2.03 percent, or 394.76 points, lower at 19,025.11, amid concern over the Chinese economy. But Shanghai ended up 0.46 percent, or 10.11 points, at 2,185.49.

 After weak June jobs figures, Sydney fell 0.70 percent, or 28.5 points, to end at 4,068.0 

By cutting its key interest rate 25 basis points to 3.00 percent, South Korea's central bank joined an international drive to ease the impact of the euro-zone debt crisis that threatens export-dependent Asian economies.

The European Central Bank and China's central bank cut their rates last week, while Brazil on Wednesday slashed its rate to a record low.

Surprise element is the Bank of Japan which took no major steps despite lowering its growth forecast for the fiscal year, to 2.2 from 2.3 percent,

Following a two-day policy meeting, the bank said it would keep rates steady at zero to 0.1 percent and fine-tuned a 70 trillion yen ($880 billion) asset-purchase programme but kept the size of the policy tool steady.

The bank said it would reduce the amount of fixed-rate loans it offers by five trillion yen and increase the purchase of treasury discount bills by the same amount, but analysts said the move would have little effect.

Asian stocks slipped very early in trade, following a lead in the US after the minutes of the Federal Reserve's June meeting showed the rate-setting committee split on whether to provide more stimulus.

Several top policymakers urged the central bank to look at new tools to bolster the financial system amid a weak recovery, but the minutes also showed the Fed split on how, when and if to provide more stimulus.

The Dow Jones Industrial Average landed to 0.38 percent.

On currency markets, the euro slipped early in European trade. It bought $1.2217 and 96.90 yen, from $1.2238 and 97.58 yen in New York late Wednesday.

The dollar goes weak to 79.31 yen from 79.74 yen in New York.

Gold was worth $1,566.81 an ounce at 0930 GMT, compared with $1,578.20 late Tuesday.

U.S. stocks fell sharply on Friday after dismal jobs data heightened the impression the economy is stuck in a rut of slow growth.

News that the world's largest economy created just 80,000 jobs in June - far fewer than needed to bring down the 8.2 percent unemployment rate - added to evidence that Europe's debt crisis is weighing on global growth. 

The report followed news this week that U.S. manufacturing shrank in June and the service sector growth slowed to its lowest level since January 2010, which might spur speculation the Federal Reserve will take more action to stimulate the economy.

Though Fed action might cheer some investors if it were to come, many are starting to doubt the ability of central banks to counter the economic gloom, while Friday's number also might not be bad enough to prompt action.

The selling on Wall Street left the S&P 500 on track for losses of about 0.7 percent on the week. At current levels it would also be the worst week in just over a month.
On the day, the Dow Jones industrial average was down 155.19 points, or 1.20 percent, at 12,741.48. The Standard & Poor's 500 Index was down 14.90 points, or 1.09 percent,. The Nasdaq Composite Index was down 42.99 points, or 1.44 percent, at 2,933.13.
Spanish government bonds rose back to levels seen as unsustainable a day after the European Central Bank cut rates to a new record low and China and Britain also loosened monetary policy.
Shares of Informatica Corp plunged as much as 35 percent after the data-integration software maker forecast a weak second quarter hurt by delayed contracts. 

Informatica was last trading down 29.7 percent at $30.48.
Networking shares took a hit after gear maker Acme Packet Inc forecast second-quarter results below expectations on continued weakness in the North American telecom service provider market.
The Arca Networking index  was down more than 3 percent, while Acme Packet tumbled 13.80 percent to $15.86.
Skyrocketing sales of the Galaxy smartphone drove a record quarterly profit of $5.9 billion at Samsung Electronics  This is likely to stretch the firm's lead over rivals Apple and Nokia . Apple shares were off 1.26 percent at $602.27.

Greece elections may prove as turning point

European stocks jumped Friday, as investors feel good on reports that central bankers stand ready to soothe financial markets if weekend elections in Greece trigger further turmoil and credit freezes.

The Stoxx Europe 600 index rose 1% to 244.21, closing the week with a 0.9% gain.

In Greece, the Athens General Index jumped 1.9% to 560.26, after having soared 10.1% on Thursday following unofficial polls pointing to a victory for the pro-austerity New Democracy party.

Among individual gainers, H&M Hennes & Mauritz AB helped lift the Stoxx 600, rising 2.1%. The Swedish retailer's second-quarter sales beat market expectations.

More broadly, banks gained on hopes that central bankers will react if the Greek election on Sunday creates further financial instability or a credit crunch.

European Central Bank President Mario Draghi said in prepared statements Friday that the "Eurosystem will continue to supply liquidity to solvent banks where needed."

The Greek parliamentary election is widely perceived as a turning point in the euro-zone crisis, as the could end up leaving the currency bloc depending on the outcome.

For the euro area, the main cost would be contagion, which is literally incalculable because it depends in large part on 'psychological' responses to the exit. But the risks are potentially enormous. Koen de Leus, strategist at KBC Securities, said it could be a "blood bath" for European stocks if the anti austerity Syriza party wins. Cyclical stocks like energy firms and base material companies would be especially hurt, he pointed out. European shares shrugged off downbeat economic data from the U.S. as Wall Street also traded higher.

Also Friday, Spanish stocks rose and bond yields eased after a week in the spotlight. The IBEX 35 index took on 0.3% to 6,719.00, gaining 2.6% for the week.

Yields on 10-year Spanish government bonds fell 3 basis points to 6.87%, after inching closer to the keenly-watched 7% level on Thursday, according to electronic trading platform Tradeweb. A basis point is 1/100 of a percentage point.

In France, most stocks remain in positive territory, with Total SA, up 1.6%, and financials providing support.

Shares of Insurance firm AXA SA shot up 4.1%, while bank Société Générale SA added 5% and Credit Agricole SA gained 6.3%.

The CAC 40 index closed 1.8% higher at 3,087.62, 1.2% higher for the week. Another gainer, Carrefour SA rose 5.9%. The food retailer said it will sell its stake in its Greek unit.

German stocks also moved higher, with Commerzbank AG adding 5.7% and Deutsche Bank AG trading up 2.4%.

Frankfurt's DAX 30 index took on 1.5% at 6,229.41. On a weekly basis, the index advanced 1.6%.

In the U.K., banks benefited as Chancellor of the Exchequer George Osborne said late Thursday that the Bank of England will activate a lending program under which auctions of short-term sterling liquidity can be held at any time.

Shares of Royal Bank of Scotland Group PLC goes upto 7.9%, while Lloyds Banking Group PLC rose 5.2% and Barclays PLC added 4.2%.

London's FTSE 100 index gained 0.2% to 5,478.81, ending 0.8% higher for the week. Shares of BP PLC advanced 1.6% and Royal Dutch Shell PLC gained 0.8% on Friday

Should Greece leave the euro??

An exit of Greece from the euro zone could cost the French taxpayer up to 66.4 billion euros and the country's banking system may get upset with 20 billion euros in lost loans. 
Eric Dor, head of research at the IESEG School of Management in Lille, said in the report that the departure of the debt-striken Mediterranean state would result in at least partial losses on its liabilities to the other member states of the 17-nation bloc. 
These include bilateral loans, lending from the euro zone's EFSF bailout fund, Greek debt held by the European Central Bank, and liabilities under the Target2 system used to settle cross-border payments in the euro system, the study said. 
France's share, equivalent to just over one-fifth of the overall sum, would total around 66.4 billion euros, Dor said. 

"A default rarely results in total losses for creditors. The losses could be a fraction of this upper limit, but they would likely be several tens of billions of euros in any case," Dor wrote. 
He also estimated that French banks, some of which have subsidiaries in Greece, had loan book exposure and holdings of Greek debt totalling 39.7 billion euros. 
If Greece leave the euro, its new currency might suffer a fall in value of around 50 per cent against the single currency, that would spell a loss of 19.8 billion euros for French banks, he wrote.