HONG KONG: Asian markets fell again on Friday after another round of Greek bailout reform talks ended without agreement days before a major debt deadline, while Shanghai collapsed eight percent at one point on fears Chinese stocks are overvalued after a year-long advance.
The euro also turned lower as investors look ahead to the weekend, when finance ministers said they will hold more last-minute negotiations to break a five-month impasse.
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—decided to pull out as the index suffers a correction.
The market, which surged 150 percent in the year to June 12, eventually closed down 7.40 percent, or 334.91 points at 4,192.87—its lowest since the start of May.
But Seoul gained 0.25 percent, or 5.20 points, to close at 2,090.26 on hopes that a new $14 billion stimulus package would help boost the sagging economy, which has been hit by the deadly MERS outbreak.
And in late trade, Hong Kong felt some of the pain from across the border, losing 2.20 percent in the afternoon.
The benchmark index sank more than 13 percent last week, having soared more than 140 percent in the previous 12 months.
Despite marathon talks on Thursday Greece and its EU-IMF creditors were unable to reach an agreement to overhaul its bailout terms that would unlock billions in much-needed cash for Athens.
The discussions had meant to pave the way for European Union leaders to endorse an accord at a full summit but ended abruptly, deciding to try again on Saturday.
“We have not made the necessary progress. In some areas one even gets the impression that we have moved backwards,” German Chancellor Angela Merkel told reporters as she arrived for the Brussels summit.
With both sides blaming the other and neither willing to budge on key issues—mostly tax and pension reform—investors fear Greece will not get its cash by a June 30 deadline, leaving it in default and likely crashing out of the eurozone or even the European Union.
The deadlock once again hit US shares. The Dow fell 0.42 percent, the S&P 500 lost 0.30 percent and the Nasdaq eased 0.20 percent.
European shares mostly retreated although Athens ended slightly higher.
Early on Friday Merkel and French President Francois Hollande said Saturday’s meeting would be crucial to finding a deal.
“We have to keep working because time is pressing and the Eurogroup 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.”
The euro slipped to $1.1199 and 138.23 yen in Tokyo Friday from $1.1206 and 138.53 yen in New York
The dollar was at 123.43 yen against 123.62 yen in US trade
In China, markets were again in retreat after last week’s sell-off as margin traders began to cash out.
“Margin traders, especially over-the-counter leveraged traders, reduced or closed their positions on the market, which is the main reason for the plunge,” Central China Securities analyst Zhang Gang told Agence France-Presse.
Outstanding margin debt in Shanghai dropped for a fourth straight day on Thursday to 1.42 trillion yuan ($228 million) Bloomberg News reported.
China’s central bank injected liquidity into the banking system on Thursday after halting open market operations for several weeks.
Adding to selling pressure were recently introduced rules tightening up on margin trading and a slew of new listings that have diverted cash.
On oil markets prices were mixed. US benchmark West Texas Intermediate for August delivery fell six cents to $59.64 while Brent crude for August gained 19 cents to $63.39.
Gold fetched $1,174.36 compared with $1,175.88 late Thursday.