Asian markets slip on Europe bank levy comments
Danny McCord in Hong Kong
Asian markets dipped on Tuesday after a top euro zone official suggested a levy on bank deposits used as part of the Cyprus bailout could be a template for future rescues in the troubled region.
Jeroen Dijsselbloem, who heads the euro group of finance ministers, said the costs of bank recapitalisations should not fall on the public sector, but on bondholders, shareholders and, if necessary, uninsured deposit holders.
His statement, which came just hours after a last-minute deal to save the Cyprus financial sector, sent the euro tumbling to a four-month low in London.
The comments to the Financial Times -- that raise the prospect of a similar policy for bailouts in other nations -- also hit US and European shares, which had been in positive territory following Sunday night’s agreement.
In early Asian trade Tuesday Tokyo was 0.30 per cent lower, Sydney slipped 0.68 per cent, Hong Kong lost 0.18 per cent, Shanghai skidded 0.34 per cent and Seoul was flat.
Dijsselbloem later released a statement via Twitter saying Cyprus was a “specific” case.
“Mr. Dijsselbloem later revised his comments, which will take some of the sting out of the fallout on equities prices,” SMBC Nikko Securities general manager of equities Hiroichi Nishi told Dow Jones Newswires.
Those comments helped the euro in New York claw back some of the losses that saw it hit a four-month low of US$1.2830 in London, while it also picked up against the yen.
In Tokyo trade the single currency fetched US$1.2870 and 121.54 yen, compared with US$1.2853 and 120.96 yen late Monday in New York.
The dollar sat at 94.40 yen, from 94.10 yen.
However, Tim Waterer, senior trader at CMC Markets in Sydney, said: “The market is not convinced that what we have seen in Cyprus will not have long-term effects on the euro zone.”
On Wall Street the Dow fell 0.44 per cent, the S&P 500 eased 0.33 per cent and the Nasdaq finished 0.30 per cent lower.
Until Dijsselbloem’s comments markets had been cheering the agreement in Brussels that meant Cyprus will receive a 10 billion euro rescue and save it from a possible exit from the eurozone.
Oil prices fell, with New York’s main contract, light sweet crude for delivery in May down 12 cents to US$94.69 a barrel and Brent North Sea crude for May shedding two cents to US$108.15.
Gold was at US$1,603.90 an ounce at 0200 GMT compared with US$1,602.70 late on Monday.