By PAMELA SAMPSON, AP Business Writer – Mon Jun 27, 1:15 am ET
BANGKOK – Asian markets dropped Monday amid fears of a spreading European debt crisis after a ratings agency placed Italian banks on a review for a possible downgrade.
Oil prices fell below $91 a barrel as a stronger U.S. dollar made crude more expensive for investors with other currencies. The greenback was higher against the euro and the yen on safe-haven buying.
Japan's Nikkei 225 fell 0.7 percent to 9,609.64, South Korea's Kospi lost 1 percent to 2,069.61, and Hong Kong's Hang Seng slipped 0.7 percent to 22,025.35, amid worries over whether debt-drenched Greece would be able to enact a slew of harsh austerity measures in order to receive a chunk of its multibillion euro bailout.
If those measures fail to win parliamentary approval, the country would be at serious risk of defaulting on its debts, a prospect that could unleash financial shocks globally.
Tey Tze Ming, a trader at Saxo Capital Markets in Singapore, said the European debt crisis — if it blows up and spreads beyond Greece to a major economy like Spain — would be felt very keenly by Asian economies that are heavily dependent on exporting to Western Europe.
"In the short term, I think stocks in Asia are going to be in for a bit more pain. I think there's a lot more downside," Ming said.
Technology shares followed their U.S. counterparts lower. South Korea's Hynix Semiconductor, one of the world's leading computer chip makers, was 4.7 percent down. Japanese chipmaker Elpida Memory slipped 1.7 percent, and Taiwan Semiconductor Manufacturing lost 1.4 percent.
But tumbling oil prices, which translate into lower fuel costs, helped sustain airline shares. Air China Ltd. rose 5.3 percent in Hong Kong. Taiwan's EVA Airways Corp. was 1 percent higher. Korean Air Lines Co. rose 0.4 percent.
Australia's ASX/S&P 200 lost 1.1 percent to 4,457 amid a banking sector slip. Commonwealth Bank of Australia, the country's largest lender, dropped 1.3 percent, while Westpac Banking Corp., which ranks No. 2, lost 0.4 percent.
Benchmarks in Singapore, Indonesia and Taiwan were also lower, while mainland China's Shanghai Composite Index gained 0.4 percent to 2,757.31.
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