Asian shares retreat as Greek debt talks break down

Nov 30, -0001

TOKYO: Asian share markets and the euro retreated on Tuesday as talks between Greece and euro zone finance ministers broke down after Athens rejected a proposal to request a six-month extension of its international bailout program.

U.S. stock futures fell 0.5 percent in Asian trade while Japan's Nikkei share average shed 0.3 percent. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent.

The euro slipped to $1.1332, about a full cent below Monday's high of $1.14295, though it kept some distance from last week's low of $1.1270 and its 11-year trough of $1.1098 hit on Jan. 26.

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the euro zone's finance minister meeting, effectively gave Athens an ultimatum, telling Greece it had until Friday to request an extension or the bailout would expire at the end of the month.

Without support from creditors, the Greek government and banks would face a looming euro cash crunch, possibly opening the way for Greece to become the first country to ditch the common currency altogether and re-introduce its own currency.

"All up, still no deal. And something of a disappointment after what seemed to be the makings of a spirit of compromise last week," said David de Garis, senior economist at National Australia Bank in Sydney.

Gold extended gains into a fourth day as concerns on Greece supported demand for safe-haven assets. Gold rose to $1,233.60 per ounce, rising further from a one-month low of $1,2118 hit on Wednesday.

The yen also ticked up to 118.34 to the dollar, extending its gain from one-month low of 120.48 hit last week.

Still, markets generally assume a compromise would eventually be reached given the potentially painful consequence of a Greek exit from the euro.

"The market had been a bit optimistic about an agreement so it was a bit of a surprise," said Kyosuke Suzuki, director of forex at Societe Generale.

"But from the past experience during the euro zone debt crisis, the market is also accustomed to negotiations dragging on until the very last minute. So while the tail risk appears to be rising, there is no panic in the market," he added.

Indeed, global shares had hit their highest levels since September on optimism over the Greek debt talks on Monday, with the MSCI all-country world stocks index touching its highest since Sept. 22.

U.S. financial markets were closed on Monday for a public holiday.

Elsewhere, oil prices held firm near recent peaks on supply concerns in Libya and Kurdistan.

Brent crude futures stood at $61.74 per barrel, having hit an eight-week high of $62.57 on Monday, gaining 38.5 percent from a six-year low hit in January.

Egypt bombed Islamic State targets inside Libya after the group released a video appearing to show killing of 21 Egyptians.

A deal aimed at resolving a dispute between Baghdad and Kurdish regional authorities overcrude oil exports looked fragile, with the semi-autonomous region's prime minister threatening to withhold exports. – Reuters







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