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2010-06-07 06:36:47
By PAMELA SAMPSON, Associated Press Writer Pamela Sampson, Associated Press
Writer 1 hr 22 mins ago
BANGKOK World stock markets tumbled Monday, dragged down by weak U.S.
employment figures and fresh fears that Europe's debt crisis is spreading to
Hungary.
Oil was also buffeted, falling to near $70 a barrel, while the dollar fell
against the yen and gained versus the euro. Wall Street was poised to open
lower. Dow futures shed 66 points, or 0.7 percent, to 9,880 while the broader
Standard & Poor's 500 futures dropped 6.6 points, or 0.6 percent to 1,059.60.
Selling was sparked in Asia on fears that Europe's debt problems could spread
after Hungarian officials said last week the nation was at risk of a
Greek-style fiscal crisis.
The comments shocked investors, pushing the euro to a fresh four-year low
against the dollar. Hungary is part of the European Union, but keeps its
national currency the forint, which dropped around 5 percent last week.
"The problem seems like a cancerous thing it's spreading from smaller country
to smaller country, and many people are afraid that it will spread to a big
country like France or Germany, although that's unlikely," said Jackson Wong,
vice president at Tanrich Securities, in Hong Kong.
"We don't have major good news on the horizon. We still have crises down the
road."
Major European stock indexes were lower in early trading. The FTSE 100 index of
leading British shares slid 85.28, or 1.67 percent, to 5,040.60 while Germany's
DAX sank 79.26 points, or 1.3 percent, to 5,859.75. The CAC-40 in France stood
at 3,387.74 points, lower by 2 percent or 67.11 points.
Asian indexes closed sharply lower Monday: Japan's benchmark Nikkei 225 stock
plunged 380.39 points, down 3.8 percent, to 9,520.80 with investors also
cautious before Japan's new leader, Naoto Kan, forms his Cabinet on Tuesday.
South Korea's Kospi lost 1.6 percent to 1,637.97 while Australia's S&P/ASX 200
was down 2.8 percent at 4,325.9. Hong Kong's Hang Seng dropped 2 percent to
19,378.15. Benchmarks in mainland China, Singapore and Taiwan also slid.
Apart from Hungary's woes, markets were also knocked down by disappointing U.S.
jobs data. The U.S. government's May jobs report showed Friday the U.S. economy
created 432,000 jobs last month, far fewer than the expected 513,000. Most of
the jobs were temporary hiring by the government for the U.S. census.
The result underlined that the U.S. economic recovery is not yet picking up the
momentum that investors have been looking for. The Dow Jones industrial average
plunged Friday 3.2 percent to 9,931.97. Major indexes all lost more than 3
percent.
Castor Pang, director of research at Cinta International in Hong Kong, said the
jobs figures were "much poorer than expected" and a key factor in driving down
Asian stocks. Markets were likely to seesaw throughout June.
"Volatility is very great due to lack of confidence," Pang said, calling some
investors "very fearful."
Investors seeking the safety of the U.S. dollar helped lift it against the euro
Monday. The euro fell as low as $1.1878 falling below $1.19 for the first
time since March 2006 before pulling up to $1.1922 in early European trading.
That was still below the $1.1943 it bought in New York on Friday.
The dollar fell against the Japanese currency, falling to 91.46 yen from 91.80
yen.
Benchmark crude for July delivery was down $1.20 to $70.31 a barrel in
electronic trading on the New York Mercantile Exchange. The contract lost $3.10
to settle at $71.51 on Friday.