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Stocks fall in Europe, Asia amid Greek turmoil

Stocks drop in France, Germany by more than 2 percent in early trading, following losses in China and elsewhere in Asia. Stocks also set to open lower in the US.  

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Kirill Iordansky/Remote/Reuters
Traders work at their desks in front of the DAX board at the Frankfurt stock exchange May 14, 2012. The German index fell 2.2 percent in early trading, despite a move in China to encourage more lending.
  • By Yuri Kageyama AP Business Writer

| TOKYO

World stock markets fell Monday as optimism over a move by China's central bank to encourage lending were offset by lingering uncertainty about crisis-struck Greece.

European stocks plummeted in early trading. Britain's FTSE 100 fell 1.8 percent and Germany's DAX tumbled 2.2 percent. France's CAC-40 lost 2.4 percent. Wall Street also appeared set for a lower opening, with Dow Jones industrial futures down 0.8 percent to 12,686 and S&P 500 futures losing 0.9 percent to 1,337.30.

Asian stocks also endured losses, although one notable exception was Japan, where the benchmark Nikkei 225 index rose 0.2 percent to close at 8,973.84.

Hong Kong's Hang Seng Index fell 1.2 percent to 19,735.04 while South Korea's Kospi slipped 0.2 percent to 1,913.73. Benchmarks in Singapore, Taiwan and Indonesia also fell.

Mainland Chinese shares also lost ground, with the benchmark Shanghai Composite Index falling 0.6 percent to 2,380.72 after a day of volatile trading. The Shenzhen Composite Index lost 0.5 percent to 956.19.

Investors appeared to take little comfort from a weekend move by the central bank to cut bank reserve requirements by 50 basis points following Friday's release of disappointing economic data. The reserve cut is expected to free over 400 billion yuan ($63.4 billion) in financing.

"The liquidity released by the authorities did not ease investors fears over the economic outlook, and the market will remain unstable in the near term," said Zhang Yang, an analyst at Sinolink Securities, based in Shanghai.

Real estate and railway contractors rose on expectations more funding may be available for projects, with Hong Kong-listed China Railway Construction Corp. up 1.3 percent.

Investor nervousness remains rampant because of political uncertainty in Greece and a possible fallout to the rest of the region.

Last-ditch efforts by President Karolos Papoulias to broker a deal between wrangling party leaders have so far failed, although more talks to form a coalition are planned for Monday.

The chances of success have been diminished after one leftist party pulled out of the talks, leading the country one step closer to new elections — and bringing its continued membership in the euro into serious doubt.

Wall Street ended last week with a decline after JPMorgan said it lost $2 billion on poorly-thought-out trades.

Benchmark oil for June delivery was down $1.72 to $94.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 95 cents to settle at $96.13 in New York on Friday.

In currencies, the euro fell to $1.2868 from $1.2925 late Friday in New York. The dollar rose to 80.05 yen from 79.90 yen.

– AP Business Writers Elaine Kurtenbach and researcher Fu Ting contributed from Shanghai.

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