Hong Kong down, European stocks climb

Hong Kong down, European stocks climb

HONG KONG — Hong Kong and Shanghai markets sank in Asian trade Thursday after China set tepid 2015 economic and trade growth targets, while the euro fell to 11-year lows ahead of a key European Central Bank meeting.

Hong Kong sank 1.11%, or 272.43 points, to 24,193.04 and Shanghai lost 0.95%, or 31.05 points, to 3248.48.

Sydney ended flat, edging up 2.57 points to 5,904.16 and Seoul was also virtually unchanged, nudging up 0.09 points to 1,998.38.

Tokyo added 0.26%, or 48.24 points, to close at 18,751.84.

Taipei fell 0.28%, or 26.64 points, to 9.595.09.

European stock markets rose at the start of trading on Thursday, with investors awaiting a key meeting of the European Central Bank.

London's benchmark FTSE 100 index edged up 0.04% to 6,916.98 points, also before the Bank of England gives its latest interest rate decision.

Frankfurt's DAX 30 advanced 0.33% to 11,390.38 points and the CAC 40 index in Paris gained 0.24% to 4,929.04 compared with Wednesday's close.

The euro meanwhile hit a new 11-year low against the dollar Thursday as investors waited for the ECB to announce details of its bond-purchase programme.

With the ECB's decision-making council meeting on Thursday, President Mario Draghi is set to unveil details of the bank's 1.1 trillion euro quantitative-easing plan, due to be launched this month to ward off deflation.

The ECB's stance is in stark contrast to the Federal Reserve's plan to exit crisis support, having ended its asset-purchasing plan in October. It is now planning to raise interest rates this year.

China's National People's Congress, the rubber-stamp legislature, opened with Premier Li Keqiang setting a growth target for this year of "approximately 7%", which would be the slowest in 25 years.

The goal, which comes after a 7.4% rise in 2014, also comes as authorities look to set the world's number two economy on a more sustainable path after decades of breakneck growth.

Authorities also cut their trade growth target for this year to "around 6%" after missing its 7.5% goal in 2014 for the third consecutive year.

Over the past several months a slew of data has indicated a slowdown in the economy, including on manufacturing, inflation and trade.

In a work report, Li said China had been hit as the global economy faced headwinds, adding: "Downward pressure on China's economy has continued to mount, and we have faced an array of interwoven difficulties and challenges."

Traders seemed to be unimpressed with news that China will link up the Shenzhen and Hong Kong stock exchanges on a trial basis as part of its financial sector reform.

The move follows a similar scheme between Hong Kong and Shanghai that started in November. However, while officials trumpeted that as opening up China's closeted stock markets to the outside world, it has met with tepid demand in both cities.

The euro has suffered heavy selling as the ECB president prepares to unveil the plan for the 60-billion-euros-a-month scheme.

The single currency traded at $1.1028 Thursday, its lowest level since September 2003, compared with $1.1080 late Wednesday in New York.

It was also at 132.19 yen compared with 132.63 yen in New York and much lower than 133.68 yen earlier Wednesday in Asia.

"The combination of deposit rates negative and QE is a very potent one, so it's very euro negative," Robin Brooks, chief currency strategist at Goldman Sachs, told Bloomberg news in Sydney.

"We have in our forecasts a very pronounced euro downswing, which is probably the most dollar-bullish forecast in all of our forecasts."

He added that the bank saw the dollar-euro reaching parity by the end of next year before the single currency falls further to 90 US cents by the end of 2017.

The dollar fetched 119.84 yen against 119.70 yen in US trade.


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