Asian markets down on European struggles

HONG KONG: Asian markets slipped on Wednesday following two days of gains as eurozone finance chiefs struggled to boost the firepower of a bailout fund for the region to prevent it from breaking up.

The ministers instead called on the International Monetary Fund for help as Italy's borrowing costs soared further past the level considered safe.

Tokyo was 0.84 percent lower by the break, Hong Kong slipped 1.74 percent, Seoul dipped 0.10 percent and Shanghai gave up 0.76 percent. Sydney was 0.10 percent off.

The losses follow a two-day rally that was triggered by hopes European officials would be able to come up with a plan to avert the break-up of the eurozone.

While the talks on Tuesday failed to boost the European Financial Stability Facility (EFSF) to the one trillion euros that had been hoped for -- from 440 billion -- ministers gave it new weapons.

They agreed to allow the fund to guarantee 20-30 percent of potential losses incurred by investors who buy bonds of troubled governments.

They also decided to create co-investment funds to allow public and private investors to participate.

On currency markets the euro was at $1.3358 and 104.06 yen in early Asian trade, compared with $1.3317 and 103.66 yen in New York late Tuesday.

The dollar firmed to 78.05 yen from 77.90 yen.

European heads, who will hold a summit on December 8-9, are facing pleas from all corners of the world to contain a crisis that is threatening to drag the entire global economy back into a deep recession.

New York's main contract, light sweet crude for January delivery, fell 16 cents to $99.63 per barrel.

Brent North Sea crude for delivery in January was down two cents to $110.80.

Gold was trading at $1,718.70 an ounce at 0200 GMT, from $1,707.90 late Tuesday. (AFP)