Asian stocks ended off lows on Wednesday, while Hong Kong rose, after German Chancellor Angela Merkel reportedly sought to ease fears over an imminent default for Greece.
Fears of contagion and of another hit to European growth had first pressured Asian markets after ratings agency Moody’s downgraded two French banks.
In Japan, the Nikkei 225 average slid 97.98 points, or 1.1%, to close at 8,518.57
In Hong Kong, the Hang Seng Index returned from holiday to inch ahead 14.90 points, or 0.1%, to 19,045.40
Europe’s debt woes are dominating markets as the threat of Greek default looms and one expert said "there’s a lot of fear in the market and concerns about counterparty risk.
“There are concerns about Asian growth sentiment and corporate sentiment as well,” he added.
Japan’s economic recovery is likely to be frustrated by Europe’s debt woes and a slowing U.S. economy, a board member of the nation’s central bank cautioned on Wednesday.
Losses for financial stocks, viewed as particularly exposed to events in Europe, accelerated in afternoon trading.
Ratings agency Moody’s Investor Services Wednesday downgraded the long-term debt and deposit ratings of French banks Credit Agricole SA and Societe Generale SA
Credit Agricole’s bank financial strength rating was also cut in a move Moody’s said means its rating is "more consistent with the bank’s sizeable exposures to the Greek economy."
Nomura Holdings Inc. fell 2.1% while Sumitomo Mitsui Financial Group lost 1.7% and Shinsei Bank Ltd. fell 3.7% in the Tokyo session.
In Sydney trading, Macquarie Group Ltd shed 3.7% and National Australia Bank Ltd. fell 3%.
Japanese exporters were pressured, with shares in Canon Inc. down 4.1% and TDK Corp. off by 3.1% and Pioneer Corp. losing 3.5%.
Property firms posted steep falls in Hong Kong trading, with shares in Agile Property Holdings Ltd. plunging 8%, China Overseas Land & Investment Ltd. shedding 3.6% and China Resources Land Ltd. down 6%.
In South Korea, auto makers were among the hardest hit. Kia Motors Corp. lost 3.8% and Hyundai Motor Co. dropped 3.3%.
Concerns about global growth and the demand for commodities dragged on resource-sector stocks throughout Asia.
Jiangxi Copper Co. lost 1.8% in Hong Kong trading, while iron-ore producer Fortescue Metals Ltd. declined 2.5% in the Sydney session.
Energy shares also gave up early gains, as benchmark Nymex crude futures fell below $89 U.S. a barrel, with Hong-Kong listed Cnooc Ltd. shed 0.3%.
Oil Search Ltd. dropped 3.6% and Karoon Gas Ltd. slumped 7.1% in the Sydney session.
Sigma Pharmaceuticals Ltd. bucked the lower trend in Australia, with the firm’s shares surging 11.5% after it swung to a first-half profit.
Meantime, Chinese Premier Wen Jiabao said Wednesday that China was willing to expand its investment in Europe, without offering specifics of possible support, according to reports.
Key on Wednesday in Europe’s unfolding debt saga is a conference call among German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou.
Later in the week, U.S. Treasury Secretary Timothy Geithner will meet with European Union finance ministers.
In other markets;
Shanghai’s CSI 300 Composite Index regained 12.83 points, or 0.5%, to 2,739.35
Taiwan’s Taiex Index plummeted another 162.90 points, or 2.2%, to 7,228.47.
Singapore’s Straits Times Index recovered 9.98 points, or 0.4%, to 2,739.35
New Zealand’s NZX 50 Index dipped 21.29 points, or 0.7%, to 3,264.11
Australia’s S&P/ASX 200 Index sidled back 66.90 points, or 1.6%, to 4,005.80
