Asian stocks decline as euro weakens on growth concerns

New York: Asian stocks declined on the first trading day of 2012, while the South Korean won and the euro weakened on concern that the global economic recovery will be hampered as Europe's debt crisis enters a new year.

The MSCI Asia Pacific, excluding Japan's index, slipped 0.4 per cent in Singapore, with more than three shares retreating for every one that rose. Financial markets from Japan to Hong Kong and the US were closed for a holiday. The Korean won fell 0.3 per cent to 1,155.86 per dollar and the euro decreased 0.2 per cent to $1.2930. Silver advanced as much as 0.2 per cent to $27.8875 (Dh102.4) per ounce, set for a third day of gains.

Worst yearly returns

Indexes of stocks and commodities had the worst yearly returns since the financial crisis in 2008. South Korea said yesterday export growth will slow this year and Singapore's government said its economy grew less than previously forecast in 2011. Data to be available soon may confirm European manufacturing shrank for a fifth straight month, as regional leaders return to work from the Christmas holidays seeking to buy time to rescue the single currency from fragmentation.

"With many markets closed, it's hard to make one-way bets especially in the absence of strong leads," said Lim Chang Gue, a fund manager in Seoul at Samsung Asset Management Co., which oversees about $28 billion.

"There's the ongoing crisis in Europe, and global demand will continue to be generally weak this year. The thing is how much China could provide buffers, but it's still unclear."

Taiwan's Taiex Index sank 1.7 per cent, Indonesia's Jakarta Composite index dipped 0.3 per cent and India's BSE Sensitive Index lost 0.3 per cent, a fifth day of declines. South Korea's Kospi Index was little changed.

South Korea's export growth will probably slow to 6.7 per cent this year from 19.6 per cent in 2011, the Ministry of Knowledge Economy said yesterday. Finance Minister Bahk Jae Wan said the economic outlook will be more uncertain and difficult in 2012 and called for a strengthening of contingency plans to prevent contagion from Europe's debt crisis.

Separately, Singapore's Prime Minister Lee Hsien Loong said the island's gross domestic product rose 4.8 per cent in 2011, compared with the government's earlier forecast of a five per cent increase, and said the economy will expand one per cent to three per cent in 2012. Indonesia said exports grew 8.3 per cent in November from a year earlier, slowing from an increase of 16.7 per cent the previous month.

China's purchasing managers' index climbed to 50.3 in December from 49 in November, beating all forecasts in a Bloomberg News survey of 15 economists. A gauge of Eurozone manufacturing was 46.9 in December from 46.4 the previous month, according to economists surveyed by Bloomberg. A reading below 50 indicates contraction.