Tuesday, May 22, 2012

Asian stock market down ahead EU summit may 23 2012

Asian stock market down ahead EU summit may 23 2012, EU summit result prediction : Asian shares retreated on Wednesday as hopes for fresh measures to tackle euro zone debt faded and caution set in ahead of a meeting of European leaders, with renewed fears Greece would leave the euro bloc dampening appetite for riskier assets.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, after rising 1.1 percent for its biggest daily gain in almost two months on Tuesday and recovering from a 2012 low hit on Friday.

Japan's Nikkei stock average opened down 0.2 percent. Bank of Japan Governor Masaaki Shirakawa is due to hold a media conference later on Wednesday after a two-day policy-setting meeting.

Investors will also be watching whether European leaders can come up with fresh measures to contain the euro zone's debt crisis as the problem escalates from concerns about a Greek exit to Spain's banking instability.

European Union leaders are expected to discuss later on Wednesday the idea of regional bonds jointly underwritten by all euro zone member states. New French President Francois Hollande supports the proposal but German Chancellor Angela Merkel is opposed to it.

"We doubt that Wednesday evening's EU summit will result in many ground-breaking concrete agreements," Barclays Capital analysts said in a research note, adding that European policymakers have agreed to put more weight on growth but have not formed a consensus on how to achieve it.

"It seems unlikely that market confidence will return until there is more visibility about developments in Greece, and Europe more generally," they said.

The Aussie dollar touched a six-month low around $0.9762 on Wednesday as investors dumped riskier, higher-yielding assets over fears of a Greek exit from the euro.

The euro fell 0.2 percent to $1.2657, nearing a four-month low of $1.2642 touched on Friday when concerns about Greece were compounded by mounting banking stress in Spain.

Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to recapitalise its four largest banks on Tuesday, allowing them to again tap funding from the European Central Bank, which cut off some Greek banks last week because they lacked enough capital to be considered solvent.

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