Eurozone worries: stocks tumble

The New Zealand dollar ended more than US1c lower than it had been on Friday at US70.11c as investors spurned high-yielding currencies. Photo / Richard Robinson

Sharemarkets throughout Asia and Australasia were hit yesterday on persistent fiscal concerns about Europe.

While the NZX-50 was relatively unscathed - down 20.263 points, or 0.635 per cent - across the Tasman the All Ordinaries tumbled 3.06 per cent.

The New Zealand dollar ended more than US1c lower than it had been on Friday at US70.11c as investors spurned high-yielding currencies.

Hong Kong's benchmark Hang Seng Index fell 2.14 per cent and Shanghai plummeted 5.07 per cent hitting its lowest level for more than a year.

In Tokyo, Japan's Nikkei average fell 2.2 per cent to a 10-week closing low as the euro's tumble to a four-year trough chilled investor sentiment and fanned fears that the eurozone's fiscal woes could slow global growth.

"Fundamentally, the worry is really that the fiscal situation in the southern European states will hit the European economy, and then the global economy," said Takashi Ushio, head of the investment strategy division at Marusan Securities.

"This would affect exporters not only in Japan but also China, raising fears that Chinese economic growth could cool too."

Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities, said: "There's a lot of nervousness still about the tough fiscal situation in the eurozone, and while Japanese earnings were good there's a lot of uncertainty about what lies ahead over the next year, especially given the stronger yen."

Oil fell below US$70 a barrel yesterday to its lowest in more than three months, extending a loss of nearly 17 per cent in two weeks on fears about Europe's debts, the weak euro and swollen United States oil inventories.

Europe's debt crisis led investors to pull money from stocks in favour of havens such as gold and Asian bonds.

In Australia, Patersons Securities associate director John Curtin said uncertainty was rife over whether last Monday's €750 billion ($1.3 trillion) bailout package would be enough to stabilise the debt position of southern European countries.

"A lot of questions are now being asked about world economic growth with the eurozone being under so much debt."

Lower commodity prices weighed heavily on the resources giants, with BHP Billiton falling 4.53 per cent and rival Rival Rio slumping 5.66 per cent.

Chinese and Hong Kong stocks fell as investors dumped shares on concerns about further tightening measures in China to curb fast-rising property prices.

The Shanghai Composite Index extended a drop since mid-April that has cut more than 17 per cent from the index's value as Beijing took steps to cool real estate prices.

The index has been one of the world's worst-performing major stock markets this year, with a 20 per cent slide.

- Agencies