after Greece prime minister George Papandreou decided to let Greeks vote on a bailout package, agreed last week, sending markets across the globe into a tailspin on Tuesday.
Asian stocks fell, the euro weakened a third day and the cost of insuring bonds against default rose as data added to evidence that regional economies are slowing as Europe's debt crisis curbs exports.
Asia stocks declined for a third day, the yen strengthened against most of its major peers and bond risk jumped on concern a Greek referendum will threaten Europe’s rescue plan and signs global economic growth is slowing.
The MSCI Asia Pacific Index sank 1.7 percent at 11:32 a.m. in Tokyo, extending its three-day loss to 6.1 percent. Standard & Poor’s 500 Index futures were little changed after a 2.8 percent slump in the U.S. stocks gauge yesterday. The yen rose 0.3 percent to 107.04 per euro and South Korea’s won sank the most in a month. The Markit iTraxx Asia index of debt-default risk headed for a three-week high. Oil fell 0.9 percent in New York, while copper rebounded from a two-day decline.
European Union leaders will hold talks in Cannes, France, before the start of the Group of 20 summit tomorrow, where they will tell Greek Prime Minister George Papandreou there is no alternative to budget cuts imposed in a bailout plan hammered out last week. The Federal Reserve will release a policy statement and economic projections today, after data yesterday showed manufacturing almost stalled in the U.S. last month.
“It’s in a terrible shambles,” Shane Oliver, the Sydney- based head of investment strategy at AMP Capital Investors Ltd., said in a Bloomberg Television interview. “After last week’s announcements, I was feeling cautiously optimistic that Europe was finally on the road to getting something done, but this is a setback for the whole process completely and it’s a great disappointment.”
About 8 shares declined for every one that gained on the MSCI Asia Pacific Index. Japan’s Nikkei 225 Stock Average and Australia’s S&P/ASX 200 Index lost 1.8 percent, and South Korea’s Kospi Index dropped 2.3 percent.
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