Investors retreat as European crisis worsens
THE sharemarket closed more than 1 per cent lower on rumours China was unlikely to inject capital into debt-ridden European economies.
THE sharemarket closed more than 1 per cent lower on rumours China was unlikely to inject capital into debt-ridden European economies.Stocks opened about 0.5 per cent higher, but the market shed its gains as cautious investors showed little appetite for shares in an uncertain global environment.That was despite a study by the Westpac-Melbourne Institute that showed local consumer sentiment had rebounded.The mood worsened after ratings agency Moody's said it had downgraded leading French banks Societe Generale and Credit Agricole, and left BNP Paribas on negative watch.The benchmark S&P/ASX 200 index closed down 66.9 points, or 1.6 per cent, to 4005.8, while the broader All Ordinaries fell 68 points, also 1.6 per cent, to 4090.4.Shaw Stockbroking dealer Jamie Spiteri said Australian shares fell in line with other Asian markets and the US futures market on the Moody's reports.The promise by the Chinese Premier, Wen Jiabao, to increase the country's investment in the euro zone was also tempered, making a bailout seem less likely to investors."An injection of [Chinese] capital will only come if European countries take the tough decisions in cutting deficits and looking to create jobs rather than just rely on China to bail them out," Mr Spiteri said.Macquarie Private Wealth director Lucinda Chan said lacklustre demand for Italian bonds at an auction on Tuesday was indicative of the mood of the market."Everyone's just marking time until more action is seen through what will happen in the Greek debt resolution," she said.The healthcare sector led the market here down, losing 3 per cent.Hearing implant maker Cochlear was the worst performer among the leading stocks, falling 14.6 per cent to $51.30, with investors still reeling two days after the company announced it was recalling a range of unimplanted hearing implants.Financials lost 1.9 per cent, with the big retail banks falling at the close. Commonwealth Bank shed 2.46 per cent, Westpac lost 2 per cent, NAB 3 per cent and ANZ 1.55 per cent.The telecoms sector rose, led by Telstra, which gained 2? to $3.02.