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Asia stocks down on skepticism over EU crisis pact

In this Dec. 9, 2011 photo, trader Anthony Satriale, center, works on the floor of the New York Stock Exchange. Enthusiasm for riskier assets such as stocks and the euro faded Monday, Dec. 12, 2011, as investors worried that Europe's new pact aimed at fixing the continent's debt crisis would be insufficient. In this Dec. 9, 2011 photo, trader Anthony Satriale, center, works on the floor of the New York Stock Exchange. Enthusiasm for riskier assets such as stocks and the euro faded Monday, Dec. 12, 2011, as investors worried that Europe's new pact aimed at fixing the continent's debt crisis would be insufficient. (AP Photo/Richard Drew)
By Pamela Sampson
AP Business Writer / December 12, 2011
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BANGKOK—Asian stock markets fell Tuesday as criticism by ratings agencies sparked wariness over a historic plan by the European Union to bind their economies closer together in an effort to fix a massive debt crisis.

Benchmark oil fell below $98 per barrel while the dollar was steady against the euro and the yen.

Japan's Nikkei 225 fell 1.4 percent to 8,529.14. South Korea's Kospi gave up 1.6 percent to 1,868.66. Hong Kong's Hang Seng lost 1.3 percent to 18,341.16 and Australia's S&P/ASX 200 dropped 1.5 percent to 4,189.30. Benchmarks in mainland China, Singapore, Taiwan and Indonesia also fell. Malaysia rose.

Markets rallied on Friday when the EU adopted a new fiscal pact meant to prevent a repeat of the financial fiasco that is now sweeping across countries that use the euro.

But that optimism dried up Monday, when credit rating agencies Moody's and Fitch both said the deal was insufficient and would not materially ease debt pressure in Europe. Moody's warned that it will review all EU governments' ratings for possible downgrades in early 2012.

"Following the comments from Moody's and Fitch, we expect to hear from S&P again soon for some post-summit comments. We already know S&P has France on ratings watch and may strip it of its AAA credit rating," Stan Shamu of IG Markets in Melbourne said in a report.

Under the deal, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets and impose tighter controls on spending. They also agreed to automatic penalties if countries spend too much.

But Moody's said the pact does not address Europe's immediate problem: the crushing debt loads of some nations and their rising borrowing costs.

High-tech shares slumped, tracking losses by industry bellwether Intel Corp., which fell 4 percent in New York after the chip-maker said its fourth quarter revenue will be lower than expected because flooding in Thailand has disrupted the supply of components.

South Korea's Hynix Semiconductor, the world's second-largest memory chip maker, lost 2.5 percent. Taiwan's Acer Inc., the world's third-largest personal computer maker, fell 1.3 percent.

Wall Street traded lower Monday. The Dow closed down 1.3 percent at 12,021.39, a loss erased nearly all of the Dow's gains from last week. The S&P 500 lost 1.5 percent to close at 1,236.47. The Nasdaq composite index dropped 1.3 percent to 2,612.26.

Benchmark oil for January delivery fell 3 cents to $97.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.64 to finish at $97.77 per barrel on the Nymex on Monday.

In currency trading, the euro was unchanged from $1.3186 late Monday in New York. The dollar was slightly up at 77.92 yen from 77.91 yen.

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