Asian Markets down on Greek referendum fears

Asian markets fell Wednesday, taking a lead from Wall Street amid fears that a Greek referendum on its latest bailout deal could derail Europes grand plan to fix its crushing debt crisis.Tokyo skidded 2.21 percent, or 195.10 points, to 8,640.42, Sydney ended 1.14 percent, or 48.3 points, lower at 4,184.6 and Seoul lost 0.61 percent, or 11.62 points, to 1,898.01.In the afternoon Hong Kong was off 0.62 percent and Shanghai shed 0.35 percent.The Greek prime ministers call for a referendum and the possibility that the countrys voters would reject the EU bailout plan sent US and European shares sharply downward Tuesday, while also taking a toll on oil prices.Bond markets were affected by fears that Italy could be the next eurozone nation to face a debt crisis, with the yield on the countrys 10-year bonds hitting 6.2 percent, close to the record reached in August.In Asian trade Wednesday, Italys benchmark 10-year bonds were yielding 6.08 percent.Embattled Greek Prime Minister George Papandreou won the unanimous backing of his cabinet for a referendum on the sweeping bailout plan agreed just last Thursday, the governments spokesman said early Wednesday.His surprise call for a vote raised the possibility that the deal would unravel, leaving Greece on the path to a default.Greeces referendum and various doubts about the agreement itself mean that the situation has gone back to square one, said Mitul Kotecha, strategist at Credit Agricole.Markets are seriously pondering a disorderly default in Greece.Japans finance minister said Wednesday that the referendum move had confused people, ahead of a Group of 20 meeting in France Thursday where the issue was expected to top the agenda.Greeces abrupt announcement on holding a referendum, which was not included in (the earlier agreed deal), has confused people, Jun Azumi told reporters.Taiwans central bank governor Perng Fai-nan was more blunt, saying the move was like throwing a bomb to financial markets, Dow Jones Newswires reported.A Greek vote against the plan would scupper the EU deal, which is designed to cut Athens debt load of more than 350 billion euros ($495 billion) by around 100 billion euros.Last weeks plan also agreed to recapitalise banks to withstand the impact of a 50 percent loss on their Greek bonds, as well as boost the European Financial Stability Facility rescue fund.Wall Street plunged on Tuesday, with bank shares pulling down the broad-based S&P 500-stock index by 2.8 percent.The blue-chip Dow Jones Industrial Average dropped 2.5 percent, while the tech-heavy Nasdaq Composite slid 2.9 percent.The declines came even as US auto sales, a key economic driver, continued to grow in October, with Chrysler enjoying a 27 percent increase, while traders awaited a US Federal Reserve rate-setting meeting Wednesday and any sign of fresh stimulus measures for the US economy.Investors were also jittery after Beijing said Tuesday that Chinas official purchasing managers index dropped to 50.4 in October from 51.2 in September, suggesting the global economys main growth driver was losing steam.Anything above 50 is seen as growth while a reading below indicates contraction.