Asia stocks dive after Europe elections, US data

A man watches the securities firm's electronic stock board in Tokyo, Monday, May 7, 2012. Asian stock markets were pummeled Monday by weekend election results in Greece and France that heightened uncertainty about Europe's ability to solve its debt crisis. Japan's Nikkei 225 index plunged 2.6 percent to 9,134.26. (AP Photo/Shizuo Kambayashi)

BANGKOK - Asian stock markets were pummeled Monday by election results in Greece and France that heightened uncertainty about Europe's ability to solve its debt crisis.

Signs of a faltering economic recovery in the U.S. compounded the dour mood while oil slid to nearly $97 a barrel. Japan's Nikkei 225 index plunged 2.7 per cent to 9,127.39 after earlier hitting a three-month, intraday low amid a rising yen. Hong Kong's Hang Seng slid 2.4 per cent to 20,583.14.

Weekend election results in Greece sent tremors throughout Europe as voters punished the parties responsible for highly unpopular austerity measures instituted to prevent the country from defaulting on its massive debts and exiting the euro currency bloc.

No political party won enough votes to form a government, raising the possibility of new elections within months and protracted uncertainty for global markets.

Meanwhile, in France, President Nicolas Sarkozy lost to Socialist candidate Francois Hollande, who had criticized the country's austerity program and wants to boost government spending.

Francis Lun, managing director of Lyncean Holdings in Hong Kong, said markets were overreacting to fears Hollande would make good on a campaign pledge to renegotiate an agreement signed by Sarkozy to put the brakes on government overspending.

"Even though Hollande indicated he will repudiate Sarkozy's agreement with the European Union, in reality he cannot do it," Lun said. "It is understood that a new government cannot repudiate or renegotiate a treaty signed by the previous government."

Yet much could depend on French parliamentary elections next month. If there is a continued backlash against austerity policies, Hollande would face additional pressure to boost spending sharply. That could lead to further downgrades of France's credit rating and kick off a fresh wave of crisis fears, destabilizing global markets.

In other Asia markets, Australia's S&P/ASX 200 lost 1.8 per cent to 4,318.70 and South Korea's Kospi shed 1.7 per cent to 1,954.84.

On Friday, U.S. stocks plunged after the government reported that hiring slowed sharply in April.

A report from the Labor Department Friday showing that U.S. jobs growth slumped in April for a second straight month. The 115,000 jobs added in April and the 154,000 in March were down form an average of 252,000 a month from December through February.

Energy stocks were among the hardest hit after the price of oil lost about 8 per cent over three trading days.

Hong Kong-listed China National Offshore Oil Corp., or CNOOC, tumbled 4.5 per cent. Japanese energy explorer Inpex Corp. lost 5.1 per cent. South Korea's S-Oil Corp. fell 4 per cent.

Financial shares sank amid all the uncertainty. Japan's Nomura Holdings Inc. plunged 7 per cent while ICICI Bank Ltd., India's largest private lender, lost 3.2 per cent.

Major Japanese exporters deteriorated as the yen strengthened. Yamaha Motor Corp. lost 5.3 per cent while Olympus Corp. was down 6.2 per cent.

Benchmark oil for June delivery was down $1.37 to $97.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $4.05 to settle at $98.49 in New York on Friday.

In currencies, the euro fell to $1.2976 from $1.3089 late Friday in New York. The dollar fell to 79.76 from 79.87 yen.

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