Asian Shares Pressured by Uncertainty Over U.S. and Greece

The euro dropped 0.2 percent to a two-month low of $1.2676, which hoisted the dollar index to a two-month high of 81.20.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9 percent in a decline led by growth-sensitive energy and technology sectors.

Worries about weak global demand, underscored on Monday by data showing Japan’s economy shrank, and the firmer dollar weighed on commodities prices and some regional share indexes.

Stocks in resource-rich Australia dropped 1.1 percent while Hong Kong shed 1 percent and Shanghai lost 1.2 percent.

Japan’s Nikkei average gave up early gains to fall 0.3 percent to a four-week low, putting it on course for a seventh straight session of decline.

“Investors can’t assess the extent of impact from the fiscal cliff and it could be months before the issue is settled, so this uncertainty is keeping investors guarded,” said Yuuki Sakurai, chief executive of Fukoku Capital Management.

“This, along with Europe continuing to muddle through its fiscal problems, is putting downside pressure on markets.”

U.S. lawmakers return to the capital on Tuesday. Analysts say a failure to act on scheduled $600 billion in tax increases and government spending cuts due early next year could tip the United States back into a recession.

Greece’s international lenders agreed on Monday to give Athens two more years to meet budget targets but euro zone finance ministers did not disburse more aid. Euro zone finance ministers will meet again on November 20 to discuss Greece.

Sakurai said market caution over the leadership transition in China this week is offsetting more bullish sentiment from recent data suggesting a pick up in the economy. Investors want to see the political change completed without any problems and the shape of the new leaders’ policies, he said.

COMMODITIES SLIP

Reflecting the slight risk aversions, Asian credit market spreads on the iTraxx Asia ex-Japan investment-grade index widened by 1 basis point.

U.S. crude futures fell 0.4 percent to $85.20 a barrel and Brent dropped 0.4 percent to $108.60.

London copper eased 0.3 percent to $7,618.75 a tonne and gold inched down 0.2 percent to $1,723.44 an ounce, having failed to test last week’s high around $1,738.

“I think there’s some disappointed selling. Of course a strong dollar also affects gold a little bit,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Analysts have said commodities are under pressure from hedge fund selling as they close their books for the year.

U.S. shares ended little changed on Monday in low volume trading while European shares fell.

(Additional reporting by Joyce Lee in Seoul and Lewa Pardomuan in Singapore; Editing by Neil Fullick)

Article source: http://www.nytimes.com/reuters/2012/11/12/business/12reuters-markets-global.html?partner=rss&emc=rss