Asian markets tumble on eurozone turmoil

HONG KONG: Asian markets resumed their downward trend on Friday as the eurozone debt crisis was stoked by a ratings downgrade for Greece and 16 Spanish banks, while weak US data added to the pessimism.

The losses followed a sell-off in Europe and on Wall Street as dealers become more risk-averse, which added to pressure on the euro.

Tokyo tumbled 2.34 percent by the break, Hong Kong fell 2.13 percent, Sydney shed 1.99 percent, Seoul dived 2.54 percent and Shanghai was 0.96 percent off.

Moody's slashed the ratings of 16 banks in Spain by between one and three notches, citing "renewed recession (in Spain), the ongoing real-estate crisis and persistent high levels of unemployment".

It also blamed the reduced creditworthiness of the government.

Top bank Santander and number two BBVA were both hit with three-notch downgrades to A3, while two other large banks Banesto and CaixaBank, were also cut to the same level.

The move came just over a week after the government intervened to prop up the fourth largest bank Bankia by taking a 45 percent stake.

Bankia on Thursday had to bat away rumours it had been hit with a run on deposits, as nervousness around the eurozone grew over the entire Spanish banking sector.

Also Thursday Fitch downgraded Greece's credit a notch, to CCC from B-, saying it was vulnerable to default amid political uncertainty over Athens' commitment to a crucial bailout plan and its possible exit from the eurozone.

"The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of Economic and Monetary Union (EMU)," it said in a statement.

A strong showing by anti-austerity parties in May 6 elections and the failure of officials afterwards to form a government "underscores the lack of public and political support for the EU-IMF 173-billion-euro ($220 billion) programme", it said. (AFP)