Asia stocks fall, euro drifts as Greece remains in spotlight

Asian equities fell on Friday as Greece failed again to reach an agreement with its creditors and stumbled towards a default, while major currencies like the euro and dollar drifted as the debt saga sidelined investors.
Asian equities fell on Friday as Greece failed again to reach an agreement with its creditors and stumbled towards a default, while major currencies like the euro and dollar drifted as the debt saga sidelined investors. PHOTO: REUTERS

TOKYO (REUTERS) - Asian equities fell on Friday as Greece failed again to reach an agreement with its creditors and stumbled towards a default, while major currencies like the euro and dollar drifted as the debt saga sidelined investors.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.2 per cent.

Japan's Nikkei dipped 0.1 per cent. Despite household spending rising more than expected, inflation has remained flat, keeping alive expectations for more central bank stimulus later this year.

Australian shares lost 0.9 per cent, while South Korea's Kospi bucked the trend and gained 0.2 per cent.

Last-ditch talks will resume on Saturday either avert a Greek default next week - Athens has to repay the International Monetary Fund on Tuesday - or start preparing for a "Plan B" to protect the euro zone from financial market turmoil.

A breakdown in talks on Thursday again revealed the wide gap in understanding between Greece and its creditors, highlighting the prospect of Athens refusing to accept any proposed concessions. Commentators also pointed to the fact that the German parliament has to ratify any changes first before paying for a bailout.

"This all points to a significant risk that Greece will fail to make its June 30th payment to the IMF and go into technical arrears," economists at Capital Economics wrote.

The euro was flat at US$1.1203, stuck within a tight US$1.1235-1153 range for the third day. It was poised to end the week about 1.2 per cent lower.

The US dollar was also little changed, last trading at 123.57 yen and hemmed in a 124.38-122.56 range this week.

With Greece in the spotlight once again, upbeat US data that could have otherwise lifted the dollar by fanning hopes for a rate hike by the Federal Reserve was relegated to the background.

Figures on Thursday showed US consumer spending recorded its largest increase in nearly six years in May, further evidence that economic growth was accelerating in the second quarter.

In commodities, US crude extended losses to the third day with weaker US refined fuels markets and potential negative impact from Greece's debt crisis on European energy demand taking a toll.

U.S. crude shed 2 cents to US$59.68 a barrel.