Global Markets: Asian shares tumble
Asian shares extended losses on Thursday as investors worried about the fiscal crisis in the United States and the European economy's further deterioration, underpinning the safe-haven dollar and yen as well as U.S. Treasuries on safety bids.
MSCI's broadest index of Asia-Pacific shares outside Japan slid 0.9 percent, retreating from a near eight-month high on Wednesday.
South Korean shares and Hong Kong shares led the declines while Australian shares fell 0.9 percent after all major U.S. stock indexes slumped over 2 percent overnight. Japan's Nikkei average dropped 1.3 percent to a one-week low as the yen firmed, weighing on exporters.
The benchmark U.S. 10-year Treasury yield stood at 1.68 percent in Asia, after ending down 11 basis points at 1.6246 percent for its biggest single-day drop since May 30 on Wednesday when stock markets tanked.
Although we expect a compromise to be reached in the end, negotiation will likely be very difficult and drag on until the end of year. Uncertainty over the fiscal cliff is likely to support bonds, said Shinichiro Kadota, non-yen fixed income analyst at Barclays in Tokyo.
World sharemarkets and the euro slid on Wednesday on concerns over U.S. fiscal challenges. Congress must avert the fiscal cliff of nearly $600 billion worth of spending cuts and tax increases set for early 2013. There is also the issue of a debt ceiling, which needs to be raised to avoid a government shutdown.
The general trend of weaker equities, higher bond prices and a weaker dollar will
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