Global markets: Shares, euro pressured as Spain stokes bailout fears
TOKYO - Shares fell and the euro stayed vulnerable after hitting fresh lows early on Monday in Asia, as concerns grew about Spain's ability to stave off a sovereign bailout.
US and European stocks tumbled on Friday after indebted region Valencia sought financial aid from Madrid. Spain's main stock index plunged 5.8 percent for its biggest one-day drop in two years, while Spain's 10-year government bond yield scaled a euro-era high at 7.32 percent.
In thin early trade, the euro slipped below 95 yen to its lowest since November 2000 against the Japanese yen and a two-year low against the US dollar around $1.2103. The single currency also plumbed record lows against the Australian and New Zealand currencies at A$1.1671 and NZ$1.5104.
"There is nothing good from Europe and that keeps the euro under pressure, especially the first half of the week when we have euro zone data," such as consumer confidence and manufacturing, said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.
"Markets may test more psychological support levels, having seen the euro already hit historic lows," Saito added.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 percent while Japan's Nikkei stock average opened down 1 percent.
More bad news emerged over the weekend from Spain, the euro zone's fourth-largest economy, when another region Murcia said on Sunday it would seek government financial assistance, while media reported half a dozen governments were ready to follow in the footsteps of Valencia.
Greece, which until last month, was at the centre of the euro zone debt crisis, said it was in a "Great Depression" similar to the United States in the 1930s, two days before international lenders arrive in Athens to sort out further rescue payments to keep the debt-laden country afloat.
The European Central Bank President Mario Draghi, however, showed confidence in the single currency, saying the euro bloc was not in danger of breaking up, judging that it was inevitably marching towards closer union among its members.
As the euro zone's three-year debt crisis deepens and heightens contagion risks, putting a drag on global economies, a surge in grains prices was threatening to further undermine fragile growth prospects.
Analysts expected food prices to increase in the wake of the rally in grains, with some seeing a looming food crisis similar to that in 2008, when riots broke out in some countries.
With the worst US drought in 56 year showing no sign of abating, Chicago Board of Trade soybean futures rose to a record high $17.77-3/4 a bushel on Friday, while CBOT corn hit an all-time of $8.28-3/4. –Reuters
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