HONG KONG, June 28, 2010 (AFP)
A G20 statement promising to cut deficits, boost growth and stabilise the markets held little sway for Asian stocks Monday, as China strengthened the yuan anew after the weekend summit.
Leaders of the world’s 20 leading economies finished a two-day meeting in Toronto with a communique committing advanced economies to at least halve deficits by 2013 and stabilise or reduce government debts by 2016.
The joint statement warned that “failure to implement consolidation where necessary would undermine confidence and hamper growth”.
But the statement was thick with caveats, with many analysts saying it did not apply strong enough pressure on debt-ridden governments.
Mizuho Corporate Bank market economist Daisuke Karakama said: “They achieved the goal of being neutral to markets — it’s a statement of little meaning.”
In the first day’s trade after the summit, Hong Kong was 0.35 percent higher by the break and Singapore added 0.59 percent.
But Tokyo’s Nikkei ended 0.45 percent, or 43.54 points, lower at 9,693.94 and Sydney was down 0.65 percent, or 28.5 points, at 4,384.5.
Shanghai dropped 0.58 percent.
The summit exposed differences over how to chart a way forward for the global economy after the worst financial crisis in decades, Cityindex head of dealing Michael McCarthy told Dow Jones Newswires in Sydney.
“Clearly the US wants the fiscal stimulus to remain in place for some time, but the Europeans say they can’t afford to keep borrowing and spending, so there’s a divergence there and there are concerns that this could lead to ructions globally,” he said.
China on Monday set the central parity rate — the centre point of the yuan’s allowed trading band — at 6.7890 to the dollar, a fraction stronger than Friday’s 6.7896 and the strongest rate since 2005.
In Monday trade, the yuan was slightly weaker at around 6.7912 to the dollar.
The move came after US President Barack Obama said in Toronto he expected China to fulfil promises to allow flexibility in the yuan, which critics say is 40 percent undervalued, giving Chinese exports an unfair advantage.
In other currency trading, the euro was at 1.2380 dollars in Tokyo, flat from New York late Friday, while edging up to 110.69 yen from 110.57 yen.
The dollar was trading at 89.40 yen, up from 89.20 yen in New York.
Markets were given no help from New York, where the Dow edged lower after the Commerce Department said Friday that gross domestic product rose 2.7 percent in the March quarter, down from a previous estimate of 3.2 percent.
Oil was mixed. New York’s main contract, light sweet crude for August delivery, fell seven cents to 78.79 dollars a barrel and Brent North Sea crude for August delivery was up eight cents to 78.20 dollars.
Gold opened at 1,256.50-1,257.50 US dollars an ounce in Hong Kong, up from Friday’s close of 1,246.00-1,247.00 dollars.