BANGKOK — Asian stock markets tumbled Monday as sentiment took a hit from a weakening economic picture in Europe and Greece's admission it won't meet its deficit reduction target despite austerity.
Oil prices fell to near $78 a barrel while the dollar strengthened against the euro but slipped against the yen.
In Tokyo, the Nikkei 225 slumped 2.3 percent to 8,493.24 — well below the close of 8,605.15 on March 15 in the aftermath of a destructive earthquake and tsunami that wiped out Japan’s northeastern coast. A government survey showing an improvement in business confidence among Japanese manufacturers did little to nudge stocks back to life.
Hong Kong’s Hang Seng dived 5 percent to 16,722.46 by the end of the morning session — its lowest level this year.
Australia’s S&P/ASX 200 fell 2.6 percent to 3,904.40. Benchmarks in Singapore, Taiwan, Indonesia, the Philippines and Thailand were all sharply lower. Markets in mainland China and South Korea are closed for national holidays.
Francis Lun, a Hong Kong-based analyst, said governments have been mishandling their economies since the 2008 financial meltdown. Greece was not given the support it needs from other countries that use the euro currency to ward off the prospect of defaulting on its debts.
Greece will run out of cash in two weeks if it does not met the criteria set down by a group of international lenders for the next installment of a financial rescue package. A default could undermine banks with significant holdings of Greece’s bonds and cause domino-style defaults in other indebted countries such as Italy.
Meanwhile, a deeper-than-expected recession prevented Greece from meeting the 2011-2012 fiscal year’s deficit target of 7.8 percent of gross domestic product, the government said. Greece’s deficit for 2011-2012 is expected to reach 8.5 percent of GDP, or €18.69 billion ($25.2 billion).
"I think Europe really could have done it better. They should have come out much earlier and said they are going to stand by Greece no matter what," Lun said. "Their procrastination really hurt market sentiment."
In the U.S., too much aid went to big corporations, Lun said. The government and the central bank threw money at the economic problems but missed the main target: helping to lower the high unemployment rate and getting people back to work.
"America spent the money incorrectly," he said. "To save the Wall Street fat cats, people are much poorer than before. The economic malaise is really caused by unemployment and unemployment is the result of a lack of personal consumption. When you don’t have personal consumption, then your economy is going to fall into a tailspin."
Shares were down in raw materials, industrial companies and banks, which would be hit hard if the global economic picture worsens.
Hong Kong-listed Agricultural Bank of China, the country’s largest rural lender, plunged 9.3 percent. Anhui Conch Cement Co. plunged 13 percent. Japanese heavy equipment maker Komatsu Ltd. lost 5.2 percent. Australia’s Fortescue Metals Group Ltd. lost 6.6 percent. India’s Tata Steel fell 4 percent.
Tumbling energy prices sent oil shares lower. Hong Kong-listed China National Offshore Oil Corp. dropped 7.5 percent, while PetroChina Co. slid 3.1 percent.
The U.S. is also at risk of another recession, mainly because of Europe’s struggles and signs of weakness in developing countries like China that have been driving global economic growth.
On Wall Street on Friday, stocks fell broadly. The Dow Jones industrial average dropped 2.2 percent to 10,913.38. The broader S&P 500 index shed 2.5 percent to 1,131.42. The Nasdaq composite index fell 2.6 percent to 2,415.40.
Benchmark oil for November delivery was down $1.03 to $78.19 per barrel in electronic trading on the New York Mercantile Exchange.
The contract closed down $2.94, or 3.6 percent, to $79.20 per barrel on Friday in New York. Prices haven’t finished that low since Sept. 29, 2010.
Crude peaked near $114 a barrel in May of this year but has since fallen 31 percent as worries grow about the global economy.
In currencies, the euro fell to $1.3317 from $1.3424 late Friday in New York. The dollar slipped to 77.04 from 77.08 yen.
