Investing.com - Asian stocks moved lower in Tuesday trade, following the downgrade of Italy’s credit rating, heightening concerns over Europe’s ongoing sovereign debt crisis.
During early Asian trade, Hong Kong’s Hang Seng Index slumped 2.76% to 18,917.90, Japan’s Nikkei 225 Index fell 1.53% to 8,728.44, and Australia’s S&P/ASX 200 edged down 0.43% to 4,058.40.
Along with the Nikkei, the broader-based Topix Index of all issues listed on the first section of the Tokyo Stock Exchange dropped 1.52% to 756.49.
Late Monday, Standard & Poor’s reduced Italy’s sovereign credit rating from A plus to A.
“The downgrade reflects our view of Italy’s weakening economic growth prospects and our view that Italy’s fragile governing coalition and policy differences within parliament will likely continue to limit the government’s ability to respond decisively to the challenging domestic and external macroeconomic environment,” Standard & Poor’s said.
The credit downgrade came as European finance officials discussed details of a second batch of rescue funds for Greece to stave off an imminent default.
Earlier Monday, Greece’s Finance Ministry said it had held “productive and substantive discussion” with European and International Monetary Fund officials, in talks aimed at confirming Greek compliance with terms laid out in last year’s USD151 billion bailout.
Greek Finance Minister Evangelos Venizelos told reporters in Athens that the government was prepared to shutter a number of state-sponsored organizations and carry out further spending cuts to its 2012 budget.
European shares ended Monday’s session sharply lower, with France’s CAC 40 falling 3%, Britain’s FTSE 100 dropped 2.03%, and Germany’s DAX slumped 2.83%.
Wall Street shares snapped a five-day winning streak, with the Dow Jones Industrial Average losing 0.94%, the Nasdaq Composite Index surrendered 0.36%, and the S&P 500 fell 0.98%.
Asian financial issues led declining stocks in early trade, with Hana Financial Group Inc. falling 1.8, and Korea Exchange Bank dropping 1% in Seoul.
In Sydney, Westpac Banking Corp. retreated 0.26%, while Macquarie Group Ltd. lost 0.37%.
Slumping oil prices contributed to losses on the Tokyo market, with Japan Petroleum Exploration Co. down 2.4%, and JX Holdings Inc. shedding 2.9% in morning trade.
The outlook for European stocks was mixed. France’s CAC 40 futures was higher by 0.17% to 2,956.80, Britain’s FTSE 100 futures fell 0.52% to 5,227.20, while Germany’s DAX futures was down 0.24% to 5,447.30.