Global stocks down as Shanghai sinks, Greece deadline looms

AP News
Posted: May 28, 2015 7:26 AM
Global stocks down as Shanghai sinks, Greece deadline looms

TOKYO (AP) — Chinese shares dived Thursday after big gains in the past three months and other global stock markets were mostly lower as a deadline neared for cash-starved Greece to make a debt payment.

KEEPING SCORE: Shares suffered a dramatic plunge in China with the Shanghai Composite dropping more than 6 percent. In Europe, France's CAC 40 slipped 0.5 percent to 5,155.42 and Germany's DAX lost 0.4 percent to 11,725.46. Britain's FTSE 100 inched up 0.2 percent to 7,046.80. U.S. shares were set to drift lower, with Dow and S&P 500 futures shedding 0.1 percent.

CHINA DIVE: The Shanghai Composite ended down 6.5 percent at 4,620.27 in another episode of the volatility that has punctuated the market during a 12-month period in which it has gained 127 percent. Stock market commentator Hexun attributed the fall to several factors including brokerages tightening margin lending, selling by speculators after the index neared 5,000 and a Chinese sovereign wealth fund selling shares in two state banks. Despite a deepening economic slowdown, the index has gained 40 percent in the past three months alone. Chinese leaders have recently tried to tap brakes on the stock market boom, fearing it could run out of control and disrupt economic reform plans.

ASIA'S DAY: Japan's Nikkei 225 rose 0.4 percent to 20,551.46; the index is up nearly 10 percent in the past three months as exporter stocks benefit from a cheap yen. Australia's S&P/ASX 200 edged down 0.2 percent to 5,713.10 while South Korea's Kospi gained 0.2 percent to 2,110.89. Hong Kong's Hang Seng took its cue from Shanghai and lost 2.2 percent to 27,454.31. Southeast Asian markets fell while Taiwan and New Zealand rose.

GREECE FACTOR: European markets got a brief boost this week after Greece said it expected to reach a deal to get more bailout loans in time for it to make a key debt repayment on June 5. Its creditors, however, were quick to temper expectations, causing markets to ease back down in Europe. It is unclear what market impact could result from Greece not repaying its debt on June 5, but the uncertainty has kept investors on edge.

THE QUOTE: "With the situation in Greece rapidly coming to a head and election results showing disenchantment with the status quo and the establishment across the continent, the pressure to reach a solution on Greece has grown rapidly," said Nicholas Teo, analyst with CMC in Singapore, in a market commentary. "Developments on this front may continue to drive trading action in the coming days."

ENERGY: Benchmark U.S. crude added 5 cents to $57.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 52 cents to settle at $57.51 a barrel in Nymex floor trading on Wednesday.

CURRENCIES: The euro fell to $1.0892 from $1.0899 in the previous trading session. The dollar rose to 124.30 yen from 123.75 yen.


Follow Yuri Kageyama: