Bloomberg News

Australian Stocks Fall After Merkel Rules Out Common Euro Bonds

November 24, 2011

Nov. 25 (Bloomberg) -- Australian shares fell after German Chancellor Angela Merkel ruled out common euro-area bonds and a bigger role for the European Central Bank in fighting the debt crisis, damping the earnings outlook for Asian exporters. Japanese stock futures declined.

Woodside Petroleum Ltd., Australia’s second-biggest oil producer, dropped 4.2 percent. James Hardie Industries SE, a building materials supplier that gets most of its sales overseas, slipped 1 percent in Sydney. BHP Billiton Ltd., the world’s biggest mining company, lost 1.1 percent.

Australia’s S&P/ASX 200 Index fell 1.1 percent today. New Zealand’s NZX 50 Index fell 0.3 percent in Wellington ahead of a general election tomorrow. Futures on Japan’s Nikkei 225 Stock Average expiring in December were bid in the pre-market at 8,150 in Osaka at 8:05 a.m. local time, up from 8,160 in Osaka yesterday.

“We are likely to see investors continue to exercise caution in the market,” said Stan Shamu, a strategist at IG Markets in Melbourne. “There’s a feeling Germany is no longer immune to this whole situation and they may act further, which is obviously why everyone is calling for common-euro bonds.”

Futures on the Standard & Poor’s 500 Index fell 0.5 percent today. The U.S. market was closed yesterday for Thanksgiving and trading will end at 1 p.m. today. The Stoxx Europe 600 Index slid 0.2 percent yesterday.

Euro bonds are “not needed and not appropriate,” German Chancellor Merkel said yesterday at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France. She said euro bonds would “level the difference” in euro-region interest rates.

The MSCI Asia Pacific Index declined 20 percent this year through yesterday, compared with a 7.6 percent drop by the S&P 500 and a 20 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.1 times estimated earnings on average, compared with 11.7 times for the S&P 500 and 9.6 times for the Stoxx 600.

--Editor: John McCluskey

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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