* Euro drops to lowest level in 14-months, stocks down
* Investors fear domino effect in euro zone debt crisis
* Safe-haven dlr, U.S. Treasuries benefit
* Markets await ECB assurance against contagion risk
(Repeats to more subscribers)
By Miral Fahmy
SINGAPORE, May 6 (Reuters) - The euro sank to its lowest
level in over a year and stocks tumbled on Thursday as Greece's
economic woes roiled global markets and fuelled fears of a
sweeping sovereign debt crisis in the euro zone.
European shares, which saw steep losses over the past two
days, were also opened around 1 percent lower. []
The euro <EUR=> fell below $1.28 in Asia, its lowest level
since March of last year, and down over 10 percent since the
start of the year. It also fell to its lowest level in two
months against the yen <EURJPY=R>.
Japanese stocks saw their biggest percentage loss in one
day since March last year, with the Nikkei average <>
falling 3.3 percent to its lowest level in nearly two months as
the market caught up with the global selloff following a
three-day holiday this week.
Other Asian shares fared little better, with the MSCI index
of shares outside Japan shedding 2.8 percent to its lowest
level since early March <.MIAPJ0000PUS>. It is also 2 percent
lower so far this year.
"There's no let-up in concerns that the euro zone debt
crisis could continue to worsen and as a result equity markets
across the globe remain under pressure," said Ben Potter,
analyst at IG Markets. "The bull market always had to end
somewhere and it looks like this could be the trigger."
Analysts said investors were waiting to hear what the
European Central Bank, which holds its monthly meeting later on
Thursday, would say to assure markets that it can contain the
Greek debt crisis. The ECB is expected to keep rates unchanged
at 1 percent. []
"The key things today are what (ECB President Jean-Claude)
Trichet says at the bank's news conference and how the supply
will go," a senior bonds trader said.
"Trichet will likely back the Greek debt deal, play down
contagion risks."
European leaders and International Monetary Fund chief
Dominique Strauss-Kahn have warned that Greece may be the first
of other, debt-ridden euro zone economies to suffer, putting
the economic health of the bloc at risk.
German Chancellor Angela Merkel said Europe's fate was at
stake. []
The cost of insuring Greek, Spanish and Portuguese debt
against default has been rising. Moody's placed Portugal's
credit rating on a three-month review, pointing to a downgrade
and pushing the cost of insuring against the country's default
risk to a record high.
Euro zone government bonds futures edged higher as ahead of
the ECB meeting and a keenly-watched debt issue by Spain,
which, in combination with France, will issue up to 12.5
billion euros worth of bonds. []
Safe-haven U.S. Treasuries and the dollar <.DXY> have
benefitted from the unease in Europe, but other assets deemed
riskier by investors have taken a beating, with South Korea's
won <KWR=> posting its biggest daily percentage fall against
the dollar in 10 months and Seoul stocks <> shedding 2
percent.
"Against the backdrop of scenes of rioting and protests in
Greece, markets tumbled and risk aversion increased," Credit
Agricole CIB's Mitul Kotecha said in a research note. "Flight
to safety is the name of the game."
The U.S. government's comprehensive labour market report
for April is released on Friday. []
Investors are worried that Greece will not be able to carry
out the austerity measures it pledged to gain a record 110
billion euro IMF/EU aid package.
Violent protests on Wednesday in Athens against the budget
cuts intensified their fears. []
Athens vowed it would not retreat from its measures
whatever the political price, but investors, so far, remain
unconvinced.
"The focus right now is primarily on how this is going to
play out in Europe, how much damage is going to be done," said
Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.
(Editing by Kazunori Takada)
