28 Sep 2008

Markets down amid wrangling over US bailout

10:51 am on 28 September 2008

Shares in the Asia-Pacific region were lower on Friday, as political wrangling over a proposed plan to bail out troubled American financial systems kept investors cautious.

Central banks across the world scrambled to meet a desperate demand for cash, as US authorities closed a bank and the government's $US700 billion bailout plan ran into trouble.

The plan will broadly help relieve finance firms of their "toxic" bad debt, in the form of complex financial instruments backed by sub-prime mortgages that many holders can no longer pay off.

As negotiations over the government's unprecedented scheme degenerated, US authorities closed Washington Mutual, the largest savings and loan bank in America, and sold its assets.

The New Zealand share market fell 50 points, or 1.5%, to close at 3187 on Friday.

Turnover was light with $72.36 million worth of shares traded.

The Australian share market closed in the red after a positive start. The benchmark S&P/ASX200 index closed down 22.6 points, or 0.46% at 4,904.8 points, while the broader All Ordinaries index had shed 26.2 points, or 0.53% to 4,934.6.

Japanese share prices were down 0.94%. The Tokyo Stock Exchange's benchmark Nikkei-225 index lost 113.37 points to end at 11,893.16. The broader Topix index of all first-section shares dropped 6.06 points or 0.53% to 1,147.89.

Hong Kong share prices fell 1.3%, as uncertainty over a US financial rescue plan kept investors away, dealers said. The benchmark Hang Seng Index closed down 252.34 points at 18,682.09.

European shares fall

The FTSEurofirst 300 index of top European shares ended 1.8% lower on Friday night.

Gold jumped 4% and the US dollar fell 1.6% against the yen, which was the strongest currency performer accross the board.

Oil slipped to about $US105 a barrel, pressured by concerns over the financial market crisis.

Further pressure came as investors, who flocked into oil and other commodities earlier this year as a hedge against inflation and a weak dollar, shifted their money into safer havens.