China down 8.5 percent as Greece holds crunch talks
European stocks slid Friday as traders awaited the outcome of a European summit and crunch talks between Greece and its creditors over the weekend.
London’s benchmark FTSE 100 index dropped 0.77 percent to stand at 6,755.70 points in midday deals.
The CAC-40 in Paris edged down 0.08 percent to 5,037.86 points and Frankfurt’s DAX 30 fell 0.30 percent to stand at 11,438.54 compared with Thursday’s close.
Athens’ main index dipped 0.11 percent to 780.82 points.
“Equities are in the red accelerating their sell-off from late yesterday as we move into what is being billed as the last weekend for Greece to present acceptable reforms,” said Mike van Dulken, head of research at Accendo Markets.
“While another last- minute weekend agreement would surely mean a relief rally come Monday, continued stubbornness on both sides could equally take us into uncharted default/euro-exit territory and the accompanying uncertainty.”
European Union leaders were meeting in Brussels on Friday and eurozone finance ministers were set to gather on Saturday for lastminute talks in a bid to save Athens from default.
The leaders of Germany and France warned Greece that it must reach a debt deal with its creditors at “decisive” talks on Saturday to avert default and a possible euro exit.
Asia Markets in Retreat
Asian markets sank again Friday after Greece’s latest bailout reform talks failed to reach a deal days before a major deadline, while Shanghai collapsed on fears Chinese stocks are overvalued after a year-long advance.
The euro also turned lower as investors looked ahead to the weekend, when EU finance ministers said they will hold more lastminute negotiations to break a five-month impasse over Greece’s debts.
Tokyo fell 0.31 percent, or 65.25 points, to close at 20,706.15, while Sydney shed 1.54 percent, or 86.80 points, to 5,545.90.
Shanghai plunged 8.5 percent at one point, its biggest loss in eight years, as investors that had flooded the market on margin trading — borrowing cash to buy stocks — ran for the door.
Chinese equities, which more than doubled in value in the year to June 12, eventually closed down 7.40 percent, or 334.91 points, at 4,192.87, its lowest point since the start of May.
The benchmark index has fallen almost a fifth in two weeks, having soared more than 140 percent in the previous 12 months.
Hong Kong felt some of the pain from across the border, losing 1.78 percent, or 481.88 points, to close at 26,663.87.
But Seoul gained 0.25 percent, or 5.20 points, to 2,090.26 on hopes that a new US$14 billion stimulus package would help boost the sagging economy, which has been hit by the deadly MERS outbreak.
With both sides unwilling to budge on key issues — mostly tax and pension reform — investors fear Greece will not get the final tranche of its international bailout by the end of the month.
Without that money Athens will default on a 1.5 billion euro payment due to the IMF, likely forcing it to crash out of the eurozone or even the European Union.
Fears over what that scenario could mean for the world economy once again hit U.S. shares on Thursday. The Dow fell 0.42 per- cent, the S&P 500 lost 0.30 percent and the Nasdaq eased 0.20 percent.
Merkel and French President Francois Hollande said Saturday’s meeting would be crucial to sealing a deal.
“We have to keep working because time is pressing and the Eurogroup (meeting) on Saturday will have a decisive importance,” Merkel told a news conference in Brussels.
“All the leaders supported the idea that everything must be done to find a solution on Saturday.”
Gold fetched US$ 1,174.05 compared with US$1,175.88 late Thursday. In other markets: — Wellington rose 0.39 percent, or 22.16 points, to 5,755.45.
— Manila gained 0.53 percent, or 40.14 points, to 7,622.05.
— Kuala Lumpur lost 0.37 percent, or 6.34 points, to 1,710.47.
— Singapore closed down 0.86 percent, or 28.97 points, to 3,320.90.
— Jakarta was flat, edging up 2.96 points to 4,923.01.
— Bangkok closed 1,518.03 points.
— Mumbai fell 0.30 percent, or 84.13 points, to 27,811.84.