Asian stocks slip over effects of Cyprus bailout

Published on NewsOK Modified: March 25, 2013 at 10:19 pm •  Published: March 25, 2013
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BANGKOK (AP) — Asian stock markets fell Tuesday as relief turned to worry over a bailout that prevents Cyprus from going bankrupt.

The bailout, signed and sealed Monday by European finance ministers, initially alleviated fears of a possible collapse of Cyprus' banking system. But soon worries arose over the terms of the deal: it requires a banking overhaul and big losses for bondholders and depositors.

Japan's Nikkei 225 index fell 0.2 percent to 12,516.92. Hong Kong's Hang Seng lost 0.7 percent to 22,094.44. Australia's S&P/ASX 200 dropped 0.9 percent to 4,947.60. South Korea's Kospi rose 0.3 percent to 1,984.19.

Concern intensified late Monday after a key official indicated that the Cyprus rescue may have to be repeated in other nations with struggling banks. Dutch official Jeroen Dijsselbloem said that bondholders and depositors should be prepared to take losses if the banks they put their money in run into trouble.

European markets in financially weaker states, such as Italy and Spain, fell sharply. Italy's FTSE-MIB closed 2.5 percent down while Spain shed 2.3 percent. On Wall Street, the Dow Jones industrial average fell 0.4 percent to 14,447.75. The S&P 500 closed down 0.3 percent at 1,551.69. The Nasdaq composite index dropped 0.3 percent to 3,235.30.

"Overall, we think that the market will eventually regard the handling of this crisis as a set-back to euro zone credibility," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.

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