Asia stocks mostly down as ECB takes hard stance on Greek debt

The central bank suspended the use of the country’s debt as collateral for its liquidity operations.

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By :  ,  Financial Analyst

Asian stocks were mostly lower today (February 5th) after the European Central Bank said it would not accept Greek bonds as collateral.

The institution took a tough stance against Athens's efforts to renegotiate bailout terms with creditors.

Global growth worries also weighed on investors' mood. The HSBC Emerging Markets Index fell to 51.2 in January from a three-month high of 51.7 in December, which indicates the weakest expansion in services sector activity in emerging markets in eight months.

Japan's Nikkei N225 dropped one per cent to close at 17,504.62, while the broader Topix index edged down half a per cent. The benchmark S&P/ASX 200 index gained 0.6 per cent to finish at 5,811 and the Kospi average dropped 0.51 per cent to finish at 1,952.84.

The Shanghai Composite closed down 1.18 per cent at 3,136.53, dropping sharply after a rise earlier in the day when the central bank said it would cut the level of reserves banks must hold in a bid to boost bank lending and China's overall economy.

"Although the move by the People's Bank Of China does ease credit and may be beneficial to stimulating demand, it is also a clear sign that growth in China is declining at faster rate than previously thought and as such could have dampening effect on demand throughout the Asia region," Boris Schlossberg, managing director at BK Asset Management, wrote in a note to clients seen by Reuters.

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