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EUR/USD Update and Asian Stocks Drop Led by Raw-Material Producers on China



We are getting reports of increasingly negative sentiments resulting from the credit crunch in China. This coupled with the US Federal Reserve chairman Ben Bernanke’s signaling of the end of quantitative easing is probably creating downwards pressure for the markets and EUR/USD. At the moment the EUR/USD is consolidating and it remains to be seen if the bearish momentum will stop. In the meanwhile do apply proper money management

Asian Stocks Drop Led by Raw-Material Producers on China Concern

Asian stocks declined, with the regional benchmark index heading for its lowest close since Dec. 5, as raw-material producers fell amid concern a cash crunch in China will curb growth in the world’s second-largest economy.

BHP Billiton Ltd. (BHP) , the world’s biggest mining company, decreased 1.7 percent in Sydney. Newcrest Mining Ltd., Australia’s top gold producer, fell 4 percent as the bullion traded near a September 2010 low. Celltrion Inc. gained 3 percent in Seoul after Singapore ’s Temasek Holdings Pte. agreed to buy an additional 150 billion won ($129.7 million) worth of shares in the South Korean drug maker.

The MSCI Asia Pacific Index slipped 0.2 percent to 125.56 as of 9:30 a.m. in Tokyo . The CSI 300 Index of China’s biggest companies tumbled 6.3 percent yesterday, taking its drop from this year’s high to more than 20 percent to enter a bear market . China’s central bank said there’s a reasonable amount of liquidity in the financial system, signaling no relief from a cash squeeze. The country’s overnight repurchase rate is 6.47 percent, more than double this year’s average.

“The Chinese central bank is sacrificing short-term pain for long-term sustainable growth,” Matthew Sherwood, Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion, said by e-mail. “Investors continue to come to grips with the concept of reduced central bank support in the U.S. and a credit squeeze in China and what this means for global growth and asset prices.”

Japan’s Topix index lost 0.5 percent, while the benchmark Nikkei 225 Stock Average slipped 0.2 percent. Australia’s S&P/ASX 200 Index fell 0.3 percent and New Zealand’s NZX 50 Index declined 0.3 percent. Markets in China and Hong Kong have yet to open.

To contact the reporter on this story: Jonathan Burgos […]

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