Spain bailout uncertainty weighs on sentiment; Asian stocks cap gains
27 Sep 2012
Asian shares were capped today as uncertainty over a bailout for Spain dented market sentiment, and global lenders wrangled over restructuring of Greek debt, highlighting the apparent difficulty of Europe's unified approach to tackling the debt crisis.
The MSCI index of Asia-Pacific shares outside Japan was nearly unchanged, dropping to the lowest level since 14 September yesterday.
The index has almost wiped out all the gains following a rally in the markets in US Federal Reserve's new QE3 job-boosting stimulus. Australian shares moved down 0.1 per cent and South Korean shares softened 0.4 per cent.
Japan's Nikkei stock average was down 0.6 per cent hitting a fresh two-week low.
As people protesting severe austerity measures took to the streets and clashed with police in Spain and Greece, European equities were down in the worst day in two months. The common currency euro also hit a two-week low against the dollar, and Spanish 10-year bond yields were up more than 6 per cent.
Spanish 10-year yields had ruled below 6 per cent since the European Central Bank said on 6 September that it would buy sovereign bonds of euro zone states, which requested a bailout, aimed at trimming costs of borrowing.
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