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Asian stocks stabilise after steep dives on early trading

Text by News Wires

Latest update : 2011-08-09

Asian stock exchanges were stabilising on Tuesday after pulling back from sharp losses earlier in the day as futures pointed to slight gains on the Dow Jones.

AP - Asian stocks markets are stabilizing after a day of dramatic plunges Tuesday as futures point to a measure of calm returning to Wall Street following the Dow’s sixth worst decline in the last 112 years. To be sure, investors remained on edge amid fears of a possible global recession. But by midafternoon, major Asian indexes had pulled back from a dizzying tailspin earlier in the day.

South Korea’s Kospi was off 3.6 percent at 1,801.35 after plummeting nearly 10 percent in the morning. Hong Kong’s Hang Seng, which fell as much as 7 percent, was down 2.9 percent at 19,890.85 and Japan’s Nikkei 225 stock average pulled back to a fall of 1.7 percent.

Australia’s S&P/ASX 200 index moved into positive territory - up 1.2 percent at 4,034.80 - and mainland China’s key indexes eked out modest gains. The big moves, which added to sharp losses in the past few days, came after the Dow Jones industrials fell 634.76 points on Monday. It was Wall Street’s first day of trading after Standard & Poor’s downgrade of the U.S. credit rating - which jolted the global financial system and reinforced anxiety that the U.S. economic recovery is stalling.

Futures suggested U.S. stocks might eke out slight gains Tuesday. Dow futures were up 6 points, or 0.1 percent, at 10,730 and broader S&P 500 futures added 1 point, or 0.1 percent, to 1,112.30. “It’s still very hard to predict how the U.S. market will do,” said Jackson Wong, vice president of Tanrich Securities in Hong Kong. “When the dust settles, if the situation doesn’t get worse in the U.S. or Europe, the situation will rebound. But the U.S. has to stabilize.”

Worries about the U.S. economic recovery have been building since the government said that economic growth was far weaker in the first half of 2011 than economists expected. Intensifying concerns were reports showing that the manufacturing and services industries barely grew in July, although job growth was better than economists expected last month. Investors are also worried that Italy and Spain could become the next European countries to have trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans because of Europe’s 21-month-old debt crisis.

The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher yields and in even higher borrowing costs for the two countries.

The European Central Bank stepped in Monday and bought billions of euros worth of their bonds. The move helped to lower yields on Spanish and Italian bonds, at least temporarily.
Benchmark oil for September delivery was down $2.51 to $78.80 a barrel in electronic trading on the New York Mercantile Exchange. That is the lowest settlement price of the year for crude, but it’s still higher than the $71.63 per barrel low of the past 12 months. Oil hit that on Aug. 24 of last year, when a combination of disappointing economic news and abundant supplies drove down prices.

Crude fell $5.57, or 6.4 percent, to settle at $81.31 per barrel on the Nymex on Monday.

In currencies, the dollar weakened to 77.29 yen from 77.70 yen late Monday in New York. The euro rose to $1.4214 from $1.4196.
 

Date created : 2011-08-09

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