Asia Stocks Drop as Euro Weakens Before European Crisis Meeting
Oct. 3 (Bloomberg) -- Asia stocks dropped, following the regional index's biggest quarterly loss since 2008, and the euro fell to an eight-month low against the dollar before European finance ministers gather to weigh the threat of a Greek default. Oil traded below $80 a barrel and copper sank a fourth day.
The MSCI Asia Pacific Index declined 1.4 percent at 9:38 a.m. in Tokyo. Standard & Poor's 500 Index futures retreated 0.2 percent. Europe's shared currency dropped 0.2 percent to $1.3363 after declining to $1.3322, the weakest level since Jan. 18. Crude sank 1.1 percent to $78.31 a barrel in New York, while copper lost 1.7 percent to $6,900 a metric ton in London.
European officials gathering in Luxembourg today will grapple with how to shield banks from the debt crisis and consider a further boost to the region's rescue fund. The Greek government said yesterday it approved 6.6 billion euros ($8.8 billion) of austerity measures as part of efforts to secure a pending aid payment and a second rescue package. U.S. factories probably grew last month at the slowest pace since July 2009, economists surveyed by Bloomberg said.
"The U.S. is not falling into recession, and we haven't seen enough evidence yet, but it's definitely slowing down," said Diane Lin, a fund manager with Sydney-based Pengana Capital Ltd., which manages about $1.1 billion in global assets. "We might face more risks, particularly in a market that hasn't had enough of a correction."
About 13 shares fell for every one that gained on MSCI's Asia Pacific Index, which dropped 16 percent in the three months ended Sept. 30. The gauge has dropped every quarter this year and is down 19 percent for the year. Japan's Nikkei 225 Stock Average slipped 1.6 percent and Australia's S&P/ASX 200 Index declined 2.1 percent. Financial markets in China and South Korea are closed for holidays today.
Greece's Crisis
Today was the original target date for approving an 8 billion-euro ($11 billion) loan payment to Greece, the sixth installment of a 110 billion-euro lifeline put together at the outbreak of the crisis in May 2010. That decision has been pushed back until mid-October, as Greek Prime Minister George Papandreou concocts plans to close the deficit gap.
Futures on the S&P 500 earlier dropped as much as 0.6 percent. The U.S. stocks gauge sank 2.5 percent on Sept. 30, rounding off a 14 percent quarterly loss that was the biggest since the three months to December 2008. The MSCI All-Country World Index tumbled 18 percent last quarter amid signs of faltering U.S. economic growth.
The U.S. Institute for Supply Management's factory index probably fell to 50.3 from 50.6 in August, according to a Bloomberg survey of economists ahead of the data's release later today. A reading of 50 is the dividing line between contraction and expansion.
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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