Asian stocks down as euro-zone crisis drags on

BANGKOK: Asian stocks opened lower on Wednesday after Slovakia blocked a measure to expand Europe's financial rescue program for heavily indebted countries.

The move sent markets south as worries intensified that a failure by Europe to contain its debt crisis could lead to a massive debt default by the Greek government.

Japan's Nikkei 225 index dropped 0.7 per cent to 8,716.13. South Korea's Kospi fell 0.3 per cent to 1,790.30, while Hong Kong's Hang Seng fell 1.4 per cent to 17,894.31. Benchmarks in Australia, Taiwan, Singapore and mainland China were also lower.

Slovakia's parliament rejected a bill Tuesday that would have strengthened the powers of a regional rescue fund to help bail out strapped economies in the eurozone.

The 16 other countries that use the euro have already signed off on the bill, but the measure requires unanimous support.

There are ways around Slovakia's opposition, but the move temporarily sets back efforts to address Europe's debt jam, which has been the most important issue for financial markets for months.

Greece has been on the brink of defaulting on its debt for months. If that happens, it would hurt European and U.S. banks by decimating the value of Greek government bonds they own. Those banks would then be less likely to lend to each other and to businesses. That could plug up an already weak global economy, with implications for everything from bank stocks to international trade.

The decision came after US stock markets closed. The Dow Jones industrial average ended down 17 points after moving between small gains and losses throughout the day.

The Dow lost 0.1 per cent to close at 11,416.3. The Standard & Poor's 500 index rose 0.1 per cent to 1,195.54, and the Nasdaq composite rose 0.7 per cent to 2,583.03.

Many market watchers think the volatility will continue until heavily indebted countries like Greece, Spain and Italy have established a clear path out of their current debt mess.
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