07/23/2012, 00.00
ASIA

Asian shares plunge because of a weaker euro and China

The Euro is at its lowest point against the yen. Fears persist that Asian exports to Europe will drop further. China cuts growth forecast. For the Japanese government, the slowdown in the world economy becomes more widespread.

Hong Kong (AsiaNews/Agencies) - Asian stock markets fell on Monday amid fears of the ongoing debt problems in the eurozone and slower Chinese growth forecast.

Hong Kong's Hang Seng Index (HSI) fell 3 per cent, China's Shanghai Composite Index retreated 1.3 per cent, Japan's Nikkei 225 Stock Average declined 1.9 per cent whilst South Korea's Kospi Index (KOSPI) slid 1.8 per cent.

The euro slipped to 94.73 yen after touching 94.63, the lowest in 12 years.

Shares reflect the fragility of the eurozone, made worst by Spain's heavily indebted Valencia region, which asked the central government for financial help to avoid bankruptcy.

The yield on Spanish 10-year bonds shot up above 7 per cent, a level that is untenable.

The eurozone is a key market for Asian exports and there are concerns that demand from the region may decline in the near term.

To the already difficult situation, the Japanese government added the opinion that the global economy is cooling.

"The slowdown in the global economy is becoming more widespread," the Cabinet Office said in a monthly report released in Tokyo today.

Song Guoqing, an academic member of a monetary policy committee with China's central bank, said that China's growth will slow down further.

"The consensus is that China's economic growth rate will be close to 8 per cent in coming months, but I personally am more pessimistic because there are problems on the export side," Song said at a forum in Beijing on Saturday. In his view, China's growth may be 7.4 per cent.

The end of the month should also see the release of US figures. All expectations are for slower growth.

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