Asia stocks drop amid recession fears, debt crisis

BANGKOK (AP) — Asian stock markets fell Monday as investors worried about Europe’s prolonged debt crisis and the possibility of a global recession continued to flee riskier assets.

Japan’s Nikkei 225 index fell 1.7 percent to 8,419.36, as a stubbornly strong yen weighed on the country’s export sector, making its products more expensive overseas. Consumer electronics giants Panasonic Corp. fell 3.8 percent and Sharp Corp. lost 3.6 percent. Isuzu Motors Ltd. tumbled 4.7 percent.

South Korea’s Kospi index was 0.8 percent lower at 1,684.48. Hong Kong’s Hang Seng index fell 0.7 percent to 17,538.43.

Bucking the trend was Australia’s S&P/ASX 200 index, up 0.2 percent to 3,911.10.

Gold shares slumped as investors sold off holdings in the precious metal to raise cash. Hong Kong-listed shares of Zijin Mining, China’s largest gold miner, fell 7.6 percent.

“Gold’s sharp decline and extreme volatility in recent weeks has raised questions about it retaining its traditional role as a safe-haven asset and the sustainability of its multiyear rally,” Credit Agricole CIB wrote in a report.

On Wall Street on Friday, the Dow Jones industrial average rose slightly — but closed the week down 6.4 percent, its worst showing since the depths of the financial crisis three years ago.

Meanwhile, fears about Europe’s debt increased early Friday on news that Moody’s Investors Service had downgraded its ratings of eight Greek banks by two notches.

Investors have been waiting in vain for news that Greece will receive the next installment of a bailout package in time to avoid defaulting on its debt next month.

If it defaults, banks throughout Europe are likely to lose the money they invested in Greek bonds — and investors fear that could ultimately lead to a recession in Europe and worsen economic problems in the U.S.

Finance ministers from the 20 biggest emerging and developed nations pledged Friday to take “all necessary actions to preserve the stability of the banking systems and financial markets.” But they offered nothing specific.

In currencies, the euro fell to $1.3427 from $1.3467 late Friday in New York. The dollar fell to 76.40 yen from 76.72 Japanese yen.

Benchmark oil for November delivery was up 17 cents to $80.02 per barrel on the New York Mercantile Exchange. The contract fell 66 cents to finish at $79.85 per barrel on the Nymex on Friday.

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