Sensex plunges 281 points on euro,reform worries

* Spain debt crisis sparks off fresh wave of risk-aversion across global markets

Written by ENS Economic Bureau | Mumbai | Published: July 24, 2012 1:20:15 am

Asian markets,including India,tumbled and the euro slumped to its lowest level against the yen in almost 12 years as Spain’s debt crisis deepened,raising concerns over the wider euro zone. After opening lower on weak Asian cues,the BSE benchmark Sensex closed with a loss of 281.09 points,or 1.64 per cent,to end below the 17,000 mark as all sectoral indices,led by metal,retail and realty,suffered losses.

Sparking off a fresh wave of risk-aversion across global markets,Tokyo slumped 1.86 per cent,or 161.55 points on Monday,to 8,508.32,Sydney shed 1.67 per cent,or 70.2 points,to close at 4,128.9 and Seoul closed 1.84 per cent,or 33.49 points,off at 1,789.44. Hong Kong was the biggest loser,slipping 2.99 per cent,or 587.33 points,to 19,053.47 and Shanghai fell 1.26 per cent,or 27.24 points,to 2,141.40.

With borrowing costs hitting the danger levels that forced Ireland,Greece and Portugal to seek a bailout,investors are concerned that Spain,one of the euro zone’s biggest economies,will also have to call for help,dealers said. In the 30-share Sensex,28 stocks,led by Maruti and Sterlite that lost over 5 per cent each,closed lower as across-the-board selling was seen.

The Sensex losses were extended by ICICI bank,HDFC Bank,ITC,Infosys,Tata Motors and RIL. In broader market,retail stocks led by Pantaloon fell in the 3-8 per cent after reports said UPA ally Samajwadi Party’s chief Mulayam Singh Yadav,among others,has opposed a move to allow FDI in retail sector.

Investors are also concerned that the government may not be able to deliver substantial policy reforms after the recent presidential elections,threatening to undo the strong gains in Indian stocks seen last month.

Re down 65 paise to 55.97/$

Following weak stock markets,the rupee also plunged by 65 paise to 55.97,its lowest closing in over three weeks against dollar amid fresh euro zone worries and month-end US currency demand from oil firms.

The domestic currency commenced sharply lower at 55.70 a dollar from last weekend’s close of 55.32. It scripted a turnaround by going up to the day’s high of 55.61 but the gains were temporary. ENS

Spanish bailout talk sends euro,shares lower
Europe is on the brink again. The region’s debt crisis flared on Monday as fears intensified that Spain would be next in line for a government bailout. Stocks fell sharply around the world. Germany’s DAX plunged 3.18 per cent. Britain’s FTSE dropped 2 per cent and France’s CAC 40 fell 2.89 per cent. In midday trading on Wall Street,the Dow Jones industrial average was down 1.35 per cent. The euro slipped just below $1.21 against the dollar,its lowest reading since June 2010. The interest rate on its 10-year bond hit 7.56 per cent in the morning,its highest level since Spain joined the euro in 1999. Concern over Spain increased after the country’s central bank said the economy shrank by 0.4 per cent during the second quarter. The collapse in stock prices in Italy and Spain prompted regulators to introduce temporary bans on short-selling. Concerns over Greece’s future within the euro zone have also resurfaced ahead of the visit to Athens by a group of international lenders on Tuesday. Agencies

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