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GLOBAL MARKETS-Euro again under pressure in Asia; gold gains

Published 06/15/2011, 02:36 AM
Updated 06/14/2011, 09:08 PM

(Updates)

* Worry over euro zone debt intensifies

* Oil falls and gold gains

* Nikkei up 0.3 pct, Hang Seng down 0.3 pct

By Robert Birsel

SINGAPORE, June 15 (Reuters) - The euro came under fresh pressure in Asia on Wednesday as worry about euro zone debt intensified, prompting a move away from riskier assets which helped gold extend gains.

Asian stocks outside Japan were largely flat. Markets generally opened higher as positive data from the world's two largest economies encouraged investors to buy into growth-sensitive assets.

But later, concern about the global outlook and the Greek debt crisis made indexes slip. Shares in Japan and Korea rose.

European stocks were expected to inch lower early on Wednesday as investors' appetite for riskier assets was seen falling after the euro zone ministers failed to finalise the Greek deal.

The ministers were unable to agree on how private holders of Greek debt should share the costs of a new bailout, putting the onus on the leaders of Germany and France to forge a deal later this week.

Selling pressure also increased as Moody's placed Credit Agricole, BNP Paribas and Societe Generale on review for a possible downgrade, focusing on their holdings of Greek public and private debt.

Oil fell on Wednesday as the dollar strengthened after the failure to strike a Greek agreement, while rising gasoline stockpiles in the United States signalled fuel demand is stalling.

The euro was also hurt by a report in the Financial Times saying the German-inspired Greek debt rescheduling plan could force euro zone governments to provide up to an extra 20 billion euro. The currency earlier came under pressure having failed to break through $1.4500 .

European Central Bank Executive Board member Juergen Stark said on Wednesday that debt relief from private banks to Greece must be on a voluntary basis, otherwise a contagion could break out on financial markets.

"The problem is not the fact that Greece is likely to face some form of a default. The problem is that the debate over the involvement of private investors in the rescue scheme drags on, making market participants jittery," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

The euro was down 0.2 percent at $1.4414 after reaching an Asian session high of $1.4451 early on Wednesday after better-than-expected U.S. retail sales and Chinese inflation data boosted risk appetite the day before.

The euro briefly dipped below support at $1.4410 and decent support was seen at $1.4375, with traders talking about good size stops at $1.4350. It also inched back towards a record low against the Swiss franc hit on Friday below 1.2 euro.

The dollar bought 80.50 yen , still well within the prevailing 79.50-81.00 yen range, where the pair seems to have stabilised after falling from an April peak around 85.50.

The Australian dollar briefly popped above $1.0700 after the Reserve Bank of Australia governor said an increase in interest rates was still likely to be needed to restrain inflation.

GOLD GAINS

Safe haven gold extended its gains amid the move out of risky assets and after data showing strong economic growth in China stoked fears of inflation, and as U.S. retail sales fell less than forecast.

Chinese data showed the world's second biggest economy may avoid a hard landing as some had feared, while a U.S. consumer spending report that was not as weak as expected lifted U.S. stocks , oil and other growth-oriented markets on Tuesday.

Spot gold was trading slightly firmer at $1,524.64 after rising to $1,525.50 earlier. It is well below a high around $1,575 touched in early May.

Japan's benchmark Nikkei average ended 0.28 percent higher while the broader Topix posted a similar gain.

The MSCI index of Asia Pacific shares outside Japan was off 0.1 percent.

The Korea Composite Stock Price Index gained 0.5 percent.

Brent crude for August , which will become the front-month contract after July expires at the end of Wednesday trade, shed 24 cents to $119.11 a barrel by 0439 GMT, while July U.S. crude slipped 30 cents to $99.07.

* For Reuters Global Investing Blog, click on

http://blogs.reuters.com/globalinvesting

* For the MacroScope Blog, click on

http://blogs.reuters.com/macroscope

* For Hedge Fund Blog, click on

http://blogs.reuters.com/hedgehub (Additional reporting by Ayai Tomisawa and Antoni Slodkowski in TOKYO; Editing by Richard Borsuk)

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