Asian markets lose ground

2012-10-08 07:58

Hong Kong - Asian markets fell on Monday as concerns over the eurozone debt crisis overshadowed surprisingly good jobs data from the United States showing unemployment almost at a four-year low.

An underwhelming return for Shanghai after a week-long holiday added to the glum outlook for the day, while the euro erased gains made in New York on Friday.

In early trade Hong Kong was 0.71% lower and Shanghai lost 0.33%, while Sydney eased 0.34% and Seoul fell 0.70%.

Tokyo was closed for a public holiday.

Wall Street provided an anaemic lead despite figures from the Labor Department showing the official jobless rate fell to 7.8% in September, down from the previous 8.1% and the lowest level since January 2009, the month that President Barack Obama took office.

The data from its establishment survey was less buoyant, showing a modest 114 000 net new jobs produced, but previous months were revised higher, underpinning the better showing in the September data.

US investors initially sent shares soaring after the numbers were released before those gains were wiped out. The Dow closed up 0.26%, the S&P 500 ended flat and the Nasdaq eased 0.42%.

And while the closely-watched jobs data provided some hope for the world's number one economy, the ongoing crisis in Europe continued to take its toll on sentiment.

There was a cautious tone as the European Stability Mechanism (ESM) was to launch later Monday with an inaugural board meeting, and European Union finance ministers were to meet.

Last-minute disagreements over key ESM commitments have surfaced with Germany, the Netherlands and Finland arguing that the fund should not be used to help banks already bailed out before it became operational.

This represents a potential blow for the likes of Ireland, which went bust after trying to keep its lenders afloat, and for Spain which has also recapitalised some of its banks and secured 100 billion euros from its eurozone partners to do more.

There are concerns Greece will not get its next tranche of much needed bailout cash as it struggles to resolve differences with its EU, European Central Bank and International Monetary Fund creditors over it austerity budget.

And despite its parlous finances Spain continues to refuse to ask for a rescue that would also allow the ECB to enter the debt market to lower Madrid's borrowing costs.

"We saw on Friday the jobs data come out that was in line with expectations in terms of the payrolls, and US unemployment ticked down... Focus has moved back towards Europe and what may happen coming out with Spain," Jason Hughes, head of premium client management for IG Markets Singapore said.

"It looks like we're still going to have a wait-and-see approach from Spain. There isn't much pressure in the secondary bond markets at the moment to cause them to need to really act quickly," Hughes added.

The euro was trading at $1.2995 compared with $1.3031 late Friday in New York, while it was at ¥102.14, from ¥102.48. The single currency lost the advances it had made on Friday in the wake of the US jobs data.

The dollar fetched ¥78.60 from ¥78.64.

Shanghai's negative return also weighed on Hong Kong dealers, with expectations dashed that a slight uptick in manufacturing activity would spur buying on the mainland.

On oil markets New York's main contract, light sweet crude for delivery in November shed 47 cents to $89.41 a barrel and Brent North Sea crude for November delivery slipped 58 cents to $111.44.

Gold was at $ 770.80 at 03:10 GMT compared with $1 789.90 on Monday.

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