Asian markets mostly down on US, France debt woes

HONG KONG: Asian markets mostly slipped Tuesday on growing concerns over France's credit rating and after a US committee charged with finding a deal to cut the nation's huge deficit said it had failed.

Investors extended the broad sell-off to a fifth straight session as leaders on both sides of the Atlantic struggle to agree on a way out of their respective debt crises, which have sent global markets tumbling.

Tokyo eased 0.40 percent, or 33.53 points, to close at 8,314.74 and Sydney fell 0.72 percent, or 30.0 points, to 4,133.0.

Hong Kong shed 0.42 percent in the afternoon while Shanghai gained 0.24 percent.

Seoul ended 0.34 percent, or 6.25 points, off at 1,826.28.

In Washington on Monday the 12-member bipartisan "supercommittee" said it was unable to meet its mission of cutting the US deficit by $1.2 trillion over 10 years.

Many had expected the panel - set up in August as part of a last-minute deal to raise the debt ceiling and avoid a devastating default - to fail due to political feuds over tax hikes on the rich and cuts to social spending.

While investors continue to fret about dangerously high bond yields in Spain and Italy, Moody's added to the sense of fear by issuing a warning about France's AAA credit rating.

An increase in Paris's borrowing costs, slowing growth and the eurozone debt crisis was posing a threat to the country's top-notch status, the agency said.

France pays almost twice as much to borrow on the bond markets as Germany, it pointed out, despite the government slashing spending and tightening up on tax revenues in an effort to stabilise its strained public finances.

However, Moody's said France's rating was safe for the moment.

The euro was at $1.3485 against the dollar, from $1.3490 late Monday in New York, and at 103.90 against the yen, from 103.75.

The dollar was at 77.05 yen, from 76.90 yen.

On oil markets New York's main contract, light sweet crude for January delivery, fell 13 cents to $96.79 per barrel.

Brent North Sea crude for delivery in January advanced 15 cents to $107.03.

Gold was trading at $1,683.65 an ounce by 0600 GMT, from $1,702.10 late Monday. (AFP)