Asian markets and the euro fell sharply Monday, with Japanese stocks plunging the most in 10 months, as a controversial bank bailout in Cyprus brought concerns about Europe’s debt crisis back to the fore.
In Japan, the Nikkei 225 Index gave back 340.32 points, or 2.7%, to 12,220.63, the market’s largest percentage decline since May 18.
In Hong Kong, the Hang Seng index plummeted 449.75 points, or 2%, to 22,083.36
The selling in Tokyo affected companies that had recently made strong gains, such as Fast Retailing, the company behind the Uniqlo chain of stores, which was down 3.7%. Exporters that were hurt by the stronger yen include Toyota Motor Corp., off 3.4%, and semiconductor manufacturer Tokyo Electron, down 5.3%.
Panasonic Corp. bucked the downward trend in Tokyo, gaining 0.6%, after a Nikkei report said that the consumer-electronics producer plans to significantly downsize its TV operations over the three years from fiscal 2013.
Cyprus proposed a tax on the country’s bank depositors to decrease the costs of the bailout. If passed by parliament, the move would mark the first time that such a strategy has been implemented during the five-year euro-zone crisis.
The move may erode savers’ confidence across the currency bloc and add to popular anger over the handling of the crisis.
The euro fell against the U.S. dollar Monday, recently trading at $1.2955 versus $1.3076 in North American trading Friday. The yen also resumed its role as a safe-haven asset as it strengthened against the U.S. dollar, to a recent 94.918 yen versus 95.96 on Friday.
Diminished concerns about Europe have been a major support for risk assets such as Asian stocks and currencies in recent months. So far this year, Europe has already weighed on sentiment, when fears of a political stalemate in Italy prompted selling in the region. That was another reminder that Europe is still able to rattle global markets.
CHINA
The Shanghai CSI 300 Composite 300 index lost 37.38 points, or 1.5%, to 2,502.49
Bank of China lost 1.7% in Shanghai. Brokerages were lower, with Haitong Securities down 2.9% and Citic Securities off 2.1%.
Investors in China were digesting the new lineup of the State Council, the national cabinet. Notable for markets was the appointment of Bank of China Chairman Xiao Gang, who will succeed Guo Shuqing as head of the securities regulator. Guo was a strong advocate of financial-market reform.
In other markets
In Korea, the Kospi Index faded 18.32 points, or 0.9%, to 1,968.18
In Taiwan, the Taiex Index doffed 116.15 points, or 1.5%, to 7,811.34
The Singapore Straits Times Index subtracted 29.58 points, or 0.9%, to 3,256.47
In New Zealand, the NZX 50 index retreated 46.03 points, or 1.1%, to 4,387.06
In Australia, the S&P/ASX fell 104.84 points, or 2.1%, to 5,015.40
