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Greece Crisis 2012: World Stocks Drop As Worries Over Country Intensify

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GREECE FINANCIAL CRISIS 2012
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BANGKOK — Asian stock markets fell Tuesday, rattled by a political impasse in Greece that could lead the debt-stricken country to a disorderly and destabilizing exit from the euro currency union.

Greece has been unable to form a coalition government since voters gave support to political parties that want to cancel or renegotiate the terms of a massive financial bailout by international lenders that requires harsh austerity measures.

If Greece walks away from its debts, an exit from the euro currency zone would be likely, and the effects would ripple throughout the rest of Europe and its struggling economies.

"The Eurozone debt crisis continues to dominate the headlines. The exit of Greece from the single currency has become probable; not so long ago it was impossible," analysts at DBS Bank Ltd. in Singapore said in an email.

Japan's Nikkei 225 index fell 1.1 percent to 8,876.16. South Korea's Kospi index tumbled 1.4 percent to 1,888.16. Benchmarks in Australia, Taiwan and Indonesia also fell.

Chinese shares were lower amid fears of a slowdown in the world's No. 2 economy. Hong Kong's Hang Seng Index fell 0.1 percent to 19,710.68 and the mainland's Shanghai Composite Index was 0.5 percent lower at 2,370.24.

Problems in Europe were compounded by the loss in a state election for German Chancellor Angela Merkel's party and – by extension – her austerity policies. The release later Tuesday of data expected to show the eurozone in recession also caused jitters.

The ongoing political stalemate in Greece drove U.S. stocks lower. The Dow Jones industrial average closed down 1 percent at 12,695.35. The Standard & Poor's 500 index fell 1.1 percent to 1,338.35. The Nasdaq composite average dropped 1.1 percent to 2,902.58.

Benchmark oil for June delivery was down 45 cents to $94.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.35 to settle at $94.78 in New York on Friday.

In currencies, the euro fell to $1.2829 from $1.2847 late Monday in New York. The dollar fell to 79.82 yen from 79.86 yen.

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